Why Apar Industries Share Price is Falling

Share price of Apar Industries, a smallcap company, touched its 52-week high of Rs 3,296 earlier this week on Monday.

The very next day, it tumbled over 14% after reporting quarterly results. Such has been the volatile nature of some small-cap stocks in 2023.

And there's nothing new about it...in the earnings season, a fall of 10-15% in a single day is quite normal.

So, what suddenly changed for Apar Industries? Why did it see such a massive fall on the bourses? Let's find out...

#1 Profit booking

A company's share price often falls even after it post good quarterly numbers as investors rush to book profits. They could be of the view that all the positives are factored in.

Profit booking is a tendency of the stock market. In multiple cases, you would see a stock coming down after rallying sharply.

Take the case of Hindustan Aeronautics (HAL). Shares of HAL rose over 66% in the last one year. On 13 March 2023, the stock hit a new 52-week high. HAL's share price is on a bullish run, due to a growing order book and increased focus of the government on self-reliance in the defence sector.

But the stock came under pressure after hitting its 52-week high price in March 2023. Within 10 days, HAL shares fell 13% despite strong growth prospects.

This is an effect of profit booking. Investors who think the stock has run its course and will likely stay in a range for the time being, will exit the stock.

On 8 May 2023, Apar Industries posted robust quarterly numbers. For the quarter ended March 2023, the company reported sales of Rs 40.9 billion (bn), up 35.7% on a YoY basis from Rs 30.1 bn reported in March 2022.

The company's net profit stood at Rs 2,427.3 m. This is 193.8% higher compared to Rs 826.1 m reported in the corresponding quarter last year.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) stood at Rs 4.3 bn in March 2023, up 138.3% from Rs 1.8 bn in March 2022. Its earnings per share (EPS) also increased to Rs 63.4 in March 2023 from Rs 21.5 in March 2022.

The company also declared a dividend. The board of the company recommended a dividend of 400% amounting to Rs 40 per equity share for the financial year 2022-23.

No wonder the company's share price hit a record-high on the same day.

However, soon after posting results, shares of the company came under pressure on the next day as investors opted to book profits and take advantage of the sharp rally.

Bright growth prospects

Apar Industries is the world's largest conductor manufacturer, 3rd largest transformer oil manufacturer, and India's largest renewable cables manufacturer. Due to its huge market size, the company enjoys a leadership position in the global markets too.

The company has a reputed clientele comprising large engineering, procurement and construction (EPC) players, and major utilities like railways, defence, and marine.

Apar Industries became the first Indian company to develop copper-magnesium catenary wires to match RDSO specifications.

Till 2008, aluminium alloy 6xxx series wires for mechanical alloys were imported into India. Using an innovative continuous casting rod technology, the company created aluminium alloy 6xxx series wires in 2008. These cables met international standards & global requirements.

Guidance optical fibre wires have always been imported into the country, leading to very high costs. It became the first Indian manufacturer to develop guidance optical fibre wires.

It was also the first Indian manufacturer to successfully develop tether cables for a surveillance and communication aerostat system.

It's safe to say that innovation is at the heart of Apar Industries' business operations. Good internal strengths combined with market opportunities, offer good growth avenues for the company.

Favourable demand prospects for transmission and distribution products in India and higher orders from abroad, is expected to provide further growth opportunities to the company.

It also has a strong competitive position in attractive growing markets coupled with lower costs and a strategically located manufacturing footprint.

Increasing global infrastructure spending, China plus one strategy, adoption of diverse renewable energy solutions, and consolidation of supplier base, will boost the company's growth going forward.

How Apar Industries share price has performed recently

On a YTD basis, Apar Industries share price has gained 44.8%.

In the past one year, its share price has delivered multibagger returns by rallying more than 300%.

Apar Industries shares touched a 52-week high of Rs 3,296.4 on 8 May 2023 and a 52-week low of Rs 558.6 touched on 11 May 2022.

About Apar Industries

Apar Industries, incorporated in 1989, operated in the diverse fields of electrical, metallurgical, and chemical engineering.

It caters to a wide range of industries such as power, rubber, tyre, ink, cosmetics, food, pharmaceutical, health care, steel, aluminium, petrochemical, plastic, paper, sugar, cement, automotive etc.

Further, it has product presence across Asia, Middle East, Africa, Europe, and Australia.

Its manufacturing facilities for aluminum conductors are located at Silvassa and Nalagarh.

To know more about company, check out the Apar Industries fact sheet and quarterly results on our website.

You can also compare Apar Industries with its peers:

Apar Industries vs Hitachi Energy

Apar Industries vs ECE Industries

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...