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Analyst Meet / AGM - Analyst Meet

Expects about 1 lakh MT of conductor orders from PGCIL in FY'16

Apar Industries

07-Jul-2015, 09:15
In interaction with the Mr. V C Diwadkar, CFO of the company

Management expects orders of about 1 lakh MT of conductor orders from PGCIL in 9 months of FY'16. Orders should start from July end and early August 2015.
Management expects less competition as some of the players are still struggling due to aggressive bidding made in earlier years. Also lower Aluminium prices will also help to a certain extent in margins.
Normal EBIDTA/MT margin of conductor business for Apar Industries is around Rs 9000-9500. EBIDTA/MT margin stood at Rs 8500 in FY'15. Due to low margin conductor order book which will be executed in FY'16, average EBIDTA/MT of conductors will be around Rs 6500. However, management expects EBDITA/MT margin to improve every quarter and to reach to normal level of around Rs 9000/MT by end of Q4 FY'17.
In terms of SEB's for conductors business, traction are seen from Gujarat, Orissa and a major way from UP.
Management expects demand of transformer oil to improve in FY'16, driven by higher capex spending planned in augmenting India's power transmission and distribution (T&D) network. Along with higher demand, rising share of 400KV and 765KV transformer oil (currently 30% of transformer oil revenue) will be a major growth driver. Apar was the first to introduce 765KV transformer oil in India while it is currently the sole supplier of 800KV HVDC transformer oil.
However nothing much excitement is seen in Q1 FY'16 in Transformer or T&D space.
Healthy margin traction is likely to continue in elastomeric and e-beam cables. Demand is emerging from sectors like solar, wind, nuclear, railway and defence while optical fibre cables are witnessing healthy demand from telecom players and BBNL network roll-out. Further, with rising spending in power T&D, the profitability of HT/LT cables will improve.
Most of the capex is completed and management aims to deleverage its balance sheet by paying off debts and strengthening the overall working capital position.