Apar Inds. Q1 FY27 Results (NSE: APARINDS)
Signal: Margin expansion
The read
Q1FY27 is a strong beat on the top and bottom lines, with Transformer Oils the star — its segment profit quadrupled YoY on a 35% revenue jump, lifting group OPM by 114bps to 9.8%. The margin expansion came from input-cost tailwind in oils rather than operating leverage (employee cost growth slow but finance cost surged 41%). PAT growth of 78% was boosted by a low base (prior year had exceptional gratuity provision). The 3 consecutive quarters of contracting OPM seen in FY26 have reversed to expansion in Q1.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹6,591.06 Cr | +29.1% | -0.2% |
| EBIT | ₹745.51 Cr | +58.5% | |
| Net profit | ₹467.45 Cr | +77.8% | |
| EPS | ₹116.37 | +77.8% | |
| EBIT margin | 9.79% |
P&L walk
Revenue grew 29% YoY (decelerating from +31% in Q4FY26 exit run-rate but still strong). Gross margin expanded sharply: cost of materials consumed grew slower than revenue at 26.9% vs revenue 29.1%. EBITDA margin expanded 114bps YoY to 9.79% — primarily input-cost tailwind in Transformer Oils segment rather than operating leverage (employee cost grew 15.2% vs revenue 29.1%, a positive semi-fixed cost drag). PAT exploded +77.8% YoY aided by a low base (prior Q1FY26 had exceptional gratuity provision of ₹7.54 Cr) and modest other income growth. EPS tracked PAT exactly (no dilution: shares outstanding nearly flat).
Segments
Transformer and Speciality Oils was the standout: revenue +34.8% YoY to ₹1,701 Cr while segment PBIT more than tripled to ₹331 Cr (margin from 7.8% to 19.5%), driving the group's margin expansion. Conductors +19.9% revenue with stable margins (PBIT margin 8.2% vs 8.5% a year ago). Cables grew revenue +29.5% but PBIT fell -37.1% to ₹83 Cr (margin compressed from 9.3% to 4.5%), dragging the consolidated result.
Key positives
- Revenue grew 29.1% YoY to ₹6,591 Cr, accelerating from the pre-pandemic trend, with all three segments in double-digit growth.
- Transformer Oils segment PBIT surged 239% YoY to ₹331 Cr on 35% revenue growth, boosting group OPM by 114bps to 9.79%.
- PAT jumped 77.8% YoY to ₹467 Cr, EPS ₹116.37 — the highest quarterly EPS in the company's history as per the PRIOR RESULTS SERIES.
- Employee cost grew only 15.2% vs revenue +29.1% — semi-fixed cost lever providing tailwind.
Key concerns
- Operating margin still only 9.79% — while expanded YoY, it dropped 20bps QoQ from Q4's 10.25%, and at 1.6x industry P/E (53.7x vs 29.8x), the premium demands sustained margin improvement beyond this quarter.
- Finance costs grew 41% YoY — faster than revenue — as segment assets rose 27% YoY, suggesting working capital intensity is rising.
- Power/Telecom cables segment PBIT fell 37% YoY to ₹83 Cr despite 29.5% revenue growth, indicating competitive pricing or unfavorable mix in that segment.
- The 77.8% PAT growth partly reflects a low base — prior Q1 had a ₹7.54 Cr exceptional gratuity charge — normalizing the beat.
Research and educational content only. Not investment advice.