Ladies and gentlemen, good day and welcome to APAR Industries Ltd. Q2 FY26 Earnings Conference Call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ambesh Tiwari from S-Ancial Technologies. Thank you, and over to you.
Thank you. Good afternoon, everyone. This is Ambesh from S-Ancial Technologies. I welcome you all to the Q2 and Q1 FY26 Earnings Call for APAR Industries. To discuss various performance and outlook, we have from the management side, Mr. Kushal Desai, Chairman and Managing Director, Mr. Chaitanya Desai, Managing Director, and CFO, Mr. Ramesh Iyer. I would now pass on to Mr. Kushal Desai for the opening remarks. Thank you, and over to you, sir.
Yeah, thank you, Ambesh. Good afternoon, everyone, and welcome to the APAR Industries Q2 H1 FY26 conference earnings call. I would like to start by giving a quick overview of our consolidated business performance, and then follow that up with a short industry update. Post that, we will get into more details on the individual performance of segments, and then finally open up the floor to questions. In terms of financial performance for Q2 FY26, the consolidated revenue came in at INR 5,715 crores, representing a 23.1% increase year-on-year, with volume growth being witnessed across all three divisions. This is largely due to good domestic business performance, as well as good export performance in the quarter as well. Our exports were up 43% year-on-year, contributing to 34.7% of the company's consolidated revenue, compared to 29.8% a year ago.
EBITDA post-open period Forex increased 24% year-on-year to INR 499 crores, with a margin of 8.7%. Profit after tax came in at INR 252 crores, which is 30% higher than the previous period. Profit after tax margin is at 4.4%, which is 20 basis points higher than what we had in FY25, sorry, in the second quarter of FY25. In terms of the first half, consolidated revenue came in at INR 10,820 crores. So this is the first time that we've crossed INR 10,000 crores in one half. It's up 25% year-on-year. EBITDA post-open period Forex stands at INR 1,000 crores, which is historically high half-yearly EBITDA for APAR. This is up 25.5% versus the first half of FY25.
The EBITDA margin stands at about 9.2%. In terms of key industry highlights, India's renewable energy sector continues to show good momentum, with the first half of the current fiscal year witnessing a record capacity addition of about 25 gigawatts, which is the highest ever in a six-month period, driven largely by the solar segment. Of the total capacity of 25 gigawatts added during April to September 25, the solar power sector, encompassing ground-mounted, rooftop, hybrid, and off-grid segments, contributed around 21.7 gigawatts, and the wind contributed about three gigawatts, according to the data which has been published by the Union Ministry of New and Renewable Energy. In terms of some sectoral updates, the Central Electricity Authority under the Ministry of Power has prepared a master plan proposing the development of 208 large hydro projects across 12 sub-basins in India's northeastern states.
The government's ambitious INR 6.4 trillion, which is $77 billion, transmission plan aims to evacuate over 76 gigawatts of hydroelectric capacity from the Brahmaputra Basin by 2047. This initiative is designed to unlock the region's vast untapped hydro potential, supporting India's clean energy transition and enhancing the national grid reliability. This initiative also represents India's largest ever investment in hydroelectric transmission infrastructure. In terms of the transmission line and substation addition, according to CEA, India's substation capacity addition saw a good momentum in the first half of FY26, rising by around 74% year-on-year. The country added 44,645 MVA of transformation capacity, which is a sharp increase from 25,690 MVA in the first half of FY25. However, this represents only two-thirds of the planned 68,183 MVA target for the period, indicating continued execution shortfalls compared to the plan.
However, in contrast, the transmission line additions have actually remained subdued. During April to September FY26, only 2,411 circuit kilometers of new lines were commissioned, which is a 27% decline from the first half of FY25, and achieving just 39% of the plan for the period. This shortfall was particularly acute in the 765 kV category, where additions dropped to 300 circuit kilometers, down 26% year-on-year and covering only 9% of the planned addition. In June 2025, the Ministry of Power announced a rollout of ultra-high voltage AC power transmission systems with 765 kV and 1,100 kV lines and 10 substations identified for development by 2034. Overall, while substation capacity additions have shown an encouraging momentum, the transmission line expansion continues to lag behind targets. However, this is expected to gather pace and align more closely with the targets in the months to come.
Now coming to our segmental performance, the conductor division in the second quarter of FY26 had a revenue growth of 34.9% year-on-year on the back of a product mix which had higher realization and a better composition. Plus, there was a volume growth of 16.2% in Q2 FY25 versus the previous period. Exports grew 74.6% over last year's same period. Exports contributed 24.2% of the overall revenue compared to 18.7% a year ago. The US revenue in the first half was up 145%. Premium product mix contribution is 45.4% in Q2 FY26 versus 42.2% in Q2 FY25. The EBITDA post-open period Forex also grew 21.4% to reach a value of 248 crores. On the margin front, EBITDA post-open period Forex stands at 39,636 rupees per metric ton, as against 37,702 rupees per metric ton for the same period last year. Improved premium mix and growth in the U.S. business has resulted in this higher EBITDA per ton. The order book comes in at INR 7,168 crores for the quarter. New orders received during H1 is at INR 5,256 crores.
Sorry, I beg your pardon. The total order book is at INR 7,168 crores, and the new orders received during H1 were INR 5,256 crores. If you look at the first half revenues, that came in at INR 5,885 crores, which is up 39% over the first half last year. Volume, again, has grown at 16.8%. The export mix stands at 22.3%. The EBITDA has come in at INR 497 crores, which is 27% higher. The EBITDA margin is at INR 41,421 per metric ton versus INR 38,095 per metric ton in the last year. We have strengthened and opened up new markets beyond the U.S.
For example, in Europe, we are expanding and entering a larger footprint in new countries for some of our premium products and also adding them in Latin America. We've also added a few new customers in Canada. In spite of all this growth in the first half, there are actually two headwinds which we are facing as we get into Q3, which is particularly due to the increase in metal prices. If you see, aluminum prices have increased to almost $2,900 per ton, and copper prices have increased to more than $11,200 per metric ton. So this is causing new ordering globally to be put on hold when customers and EPC players, developers, etc., are playing a waiting game in the short term to see if prices actually correct downward. And during this period, the ordering is significantly reduced.
What we see is execution taking place of only those customers who had previously blocked the metals at older prices. This is also, to some extent, true in the cables business, especially in solar cables and some of the other cables where the metal content is reasonably high. Now coming to our oil business, revenues from operations remain flat compared to last year, largely because crude prices in the first half have been lower than what they were in the same period previous year. Volume has grown 8.2%. Transformer oil volume was a bit lower at 4.6% at a global level on account of some execution delays in the supply chain, especially from our plant in the Middle East as well as in some of the export locations. However, the transformer oil domestic business posted a very strong revenue growth of 13.6% versus the previous year.
Automotive oils grew 3.7%, whereas industrial lubricants grew 18.8%. Exports contributed 43% of the overall oil division revenues as compared to 44.7% a year ago. In terms of EBITDA per KL, this quarter it's at 5,869 versus 5,473 rupees per KL a year ago. H1 revenue has also remained pretty much flat for the same reason. However, the domestic transformer oil business has grown 17.3% in the first half versus the same period previous year, and the export mix in the first half stands at 40%. In terms of our cables division, the revenue in Q2 FY26 posted a strong revenue growth of 25.1% to reach 1,535 crores. The U.S. revenues in the first half have grown 121.2% over the last year. The export mix was 42.3% in Q2 FY26 versus 29% in Q2 FY25. The EBITDA post-Forex recorded a year-on-year growth of 32% to reach rupees 157 crores.
EBITDA margin came in at 10.2% in the quarter, which is up 50 basis points compared to the last year. The pending order book stands today at INR 1,836 crores. The cables business for the first half posted a revenue growth of 30.2% to reach INR 2,954 crores. The export mix stands at 41.8% in H1 versus 31% a year ago. Again, the U.S. revenues have grown 127.7% in the first half. The EBITDA post-Forex grew 32.1% to INR 299 crores with an EBITDA margin of 10.1%. So I'd now like to just move to concluding remarks and summing up the scenario. So from a fundamental, if you look at the fundamental growth drivers for the company, we believe that they still continue to remain fairly intact. There is a steady inflow of business coming from renewable energy in India as well as around the globe.
There is continued investment happening in terms of grid monetization and augmentation at a global level. Domestic business continues to be relatively strong, and our presence across multiple segments in the generation, transmission, and distribution of electricity continues to be healthy. On the export front, the U.S. tariff situation is fluid at the moment with various announcements that have happened over the last few months. One important development has been that aluminum and almost 400 products were added to the Section 232 duty, which is uniform at 50% for aluminum, copper, and steel, and this is uniform across all the countries.
As a consequence, that puts us in a slightly less disadvantageous position because when you look at the export of the product, the metal content is charged at the 50%, and then the non-metal content is then charged on the basis of the basic duty plus the reciprocal duty, which in India is at 54% at this stage versus the lowest duties which are coming from the Middle Eastern countries and the U.K., which stands at approximately 10%. Based on news articles and talks which are going on about the trade deal, hopefully it seems that there is a certain level of progress taking place. However, in the meantime, customers in the United States have honored their commitments on most of the orders, and they have accepted the materials.
There is also a willingness for them to absorb a part of the duty, allowing us to make some adjustments in our prices and margins. And the new order inflow has started in Q3 after a break of two months in Q2. The pace of orders is a little bit slower as customers try to size up the geopolitical situation and the tariff situation. However, there are certain incentives which were announced by the U.S. government, which are time-bound. So it requires construction to start of renewable energy projects, especially solar projects, by 4th of July 2026. And the project has to be completed and in service, i.e., by delivering power into the grid before December 27. So considering this, I would believe that order inflow will continue to be there and would actually increase to avail of the incentives which are there.
The Trump government seems to have hinted that this period may not get extended, so accordingly, we are seeing improvement in the order inflow in Q3, but this is likely to be executed during the end of Q3 and early Q4, and the revenues for what we export in Q3 will be realized only in Q4, resulting in Q3 coming under some amount of pressure both on top line as well as on the overall profitability side, so given that globally there is an increase in demand, we would also look at trying to mitigate some of the shortfall of the U.S. in the shorter term by trying to book more business in the domestic market as well as in some of the other export markets. As I mentioned earlier, one dampener is that there has been a sudden spike in the price of aluminum and copper, which is holding off people from finalizing their orders in the hope or expectation that these prices may fall. But overall, we believe that if you look beyond one quarter and you look into the medium term, we believe that the business fundamentals continue to remain strong. So on this note, I'd like to conclude my presentation and open up the floor to questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Umesh Raut from Nomura. Please go ahead.
Yeah, hi sir. Congratulations for a very strong set of results. My first question is pertaining to a conductor segment where we have reported a very strong set of EBITDA per ton realization numbers consecutively for almost now three quarters. And our guidance is at about closer to about INR 30,000 per ton on this side. So any revision in terms of guidance now considering that consistent performance of EBITDA per ton, more of closer to INR 40,000 per ton, and especially with respect to what you talked about in case of U.S. market, how demand is kind of shaping up. If you can divide that demand in case of data center and then other government-related projects, and where exactly do you see post-commitments kind of happening in terms of decision-making from the customers? And also in case of domestic market, how do you see second half shaping up in terms of demand considering that first half was relatively soft in terms of executing projects on transmission line side?
Yeah, hi, Umesh. So I'll answer the first part of it. Basically, on the EBITDA part, we will continue our guidance of 30,000 per metric ton. As we have been explaining in the calls earlier, it's a combination of various product categories. And depending on what gets executed during the quarter, our margins come up. As you would have seen, the EBITDA margins have been guiding from INR 10,000-INR 30,000 over the last two, three years, where we see a comfort level below which the EBITDA are not likely to drop over a 12-month period. So despite that, we have got INR 35,000-INR 40,000 EBITDA per metric ton. For the time being, we'll continue to guide INR 30,000 per metric ton for the future, for the overall medium to long-term 12-month period.
On the second part of your question, so data centers is definitely one of the major drivers of the electricity demand in the U.S. But in terms of the products that we are selling, especially the conductor part, so transmission is an important component to feed the power to the data centers. Definitely, that is one of the areas we don't have the exact breakup, but our estimate is that the major part of the demand currently in the U.S. is actually coming because of the data centers. The second driver is also in terms of the various other projects, especially wind energy in the U.S. So a lot of transmission lines are coming up in those wind corridors to transmit the power from the generating point to the various consumption areas. So these are the major drivers.
Okay. In domestic market, how do you see things shaping up in especially second half FY26?
Second half traditionally is always better in terms of less weather-related issues. So we feel that there will be a better progress, as was already explained, that the progress in the first half in this year has been behind the target by a huge margin in India. But hopefully, we expect things to gather pace in the second half.
Got it, sir.
So the pricing of the aluminum, which we spoke about, that there are some projects which already the bidders have bid with a certain assumption of aluminum and the products based on aluminum. So they are waiting till the prices of aluminum drop for them to actually go ahead with the placement of orders. So to the extent they can delay some of the projects, there will be a little bit of that effect also happening in India and outside India. Got it.
In terms of import of conductor or cables in U.S. market, so when you talked about that most of these countries are at par with respect to duties of 50%, excluding Middle East and U.K. or Europe. So basically, how much of that portion which is coming in from Middle East and Europe into U.S. market as a part of total demand?
Sure. So I think. Hello?
Just a moment. Just a moment. There is a noise drop. This is the operator. Sorry to interrupt you. Ladies and gentlemen, the management line has been disconnected. Please hold while we get them reconnected. Ladies and gentlemen, thank you for being on hold. The management has been reconnected. Thank you and over to you.
Okay. Thank you. My apologies. I don't know. The line seemed to have some trouble and dropped. As I was explaining, there are actually now the U.S. tariff situation is a bit complicated to understand. Let me spend a minute and explain. There is something called Section 232 in which strategic products are included from a U.S. economy perspective. That includes three metals, which are aluminum, copper, and steel. The duty on these, irrespective of the country from which the metal is being imported, is attracting a duty of 50%. If a product lands there with a value of $100 and it has $40 of metal, then that $40 will attract a duty of 50%.
The remaining $60 will attract a duty based on the reciprocal rate of duty. What we were saying here is that India actually has. We've gained to some extent because it's normalized to the extent of the metal portion. And the disadvantage is to the extent of the non-metal portion, which is anywhere between, in the case of conductors, it's probably around 30% is the non-metal portion of the value of the goods, whereas in the case of cables, it could be as high as 50% of the value of the goods. So there is this disadvantage that still exists at the moment. But because the metal portion is equalized, the overall impact is a bit lower. Does that answer your question, Umesh?
Yeah. Yes, sir. So my final question is on cables business side, where we have seen margins, EBITDA margins kind of hovering in the range of 10% since last few quarters. I think you have mentioned in the past that we were doing certain repositioning exercises, branding exercises, and that's why expenses were relatively higher. Over the course of scale-up in the business, we will have margins improvement coming in. So basically, I just want to understand how should one think about EBITDA margin in the cables business going forward?
Yeah. So on a medium to long-term basis, we expect the margins to hover around 10%-12%, as we have been guiding earlier. And because of the various categories of the product, because of multiple markets of the product, it could anywhere be at the lower end of 10% or the upper end of 12% over a period of time. So that's where it's likely to land. And we are in that range currently.
Okay. And is it possible to share any breakup in between end-user markets where you experience relatively higher margin for those specific applications? And in some segments, margins could be relatively lower. So any possible breakup that you can share on cables side?
No, there is no fixed pattern as such. It all depends on the composition, on the requirements, on the mixed specifications. There are a lot of moving parts there due to which it may not be possible to arrive at this kind of answers properly.
Okay. Got it, sir. Thank you so much and all the very best.
Thank you.
Thank you. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Thanks for the opportunity, sir. My first question is on the advance due to metal prices, which you highlighted. And you also talked about the ordering is significantly reduced. Is it what you're talking about refers to U.S.? And what is the assessment with respect to impact of this metal prices in the near term? Anything, any impact on the gross margin because of this? If you could highlight on that.
So there are two parts to it. One is I mentioned in the opening remarks that because metal prices have suddenly shot up, people have stopped ordering at the moment because their product will be more expensive. A lot of customers are in a wait-and-watch mode to see if the prices actually correct downward for the metals, in which case they would end up placing new orders. So the order inflow has not been canceled, but it's on hold in many instances. The second part of your question is whether it's going to have an effect on gross margins. The answer to that is no because we run a completely hedged book. So we do not take on the risk of the metal. That risk is sitting with customers, and on a back-to-back basis, we end up taking the positions on the metal.
Yeah. Second, sir, on tariffs. So you did highlight that 30% of conductors' business might get impacted, as you explained, and 50% of cables component. So given that there's a 50% tariff applicables in September, October already until the deal happens, any impact you witnessed, if you could explain any amount or percentage where, despite negotiation with the customer, we had an impact on sales in U.S. markets?
So for almost two months, which is your August and September of the last quarter, the order inflow had almost completely stopped because people were waiting and watching to see what would happen between the tariff situation. However, as I mentioned in the opening remarks that in Q3, we have started seeing a flow of orders starting to come in. So this would definitely have a short-term impact in our booking of revenues in Q3 of FY26 because the new order inflow which has started coming in, even though it is at lower margins, it is all on a DDP basis. So the revenue will get recognized in Q4 of FY26. So there is a definite impact, but the order inflow has already started coming in. And as I mentioned, with certain customers who want to avail of these incentives in the United States on the renewable energy, there are certain timelines in which they need to deliver. So I think that to some extent, at least as far as solar installations are concerned, there is a movement that we've seen that has already started in spite of the higher tariff levels.
Understood, sir. For cables, we can see this quarter. I think the sales was about INR 85 crores for domestic business, which is kind of hardly 1-2% growth. Any reason there? Exports for cables, despite you explained that the orders just dropped. If you could explain the exports for cables were significantly higher despite the tariff. If you would like to explain these numbers on cables.
In terms of the cables exports to the U.S., because the tariffs were the periods were already announced by which the increase would take place, a lot of customers have taken delivery of product to meet with those deadlines. That's reflected in the higher percentage number that you see of growth in the cables side. Also, the domestic market Q2 is normally the slowest period. The power cables work really stops quite dramatically in Q2. So we took that period to actually complete all the U.S. export orders which were there. We've not really had any major penalties and tariff-related issues to absorb in terms of our own P&L so far. Our expectation is that in Q3 and Q4, the domestic market will be picking up. And in Q4, you will see a lot of more billing happening to the U.S. markets and the other export markets as well.
So finally, last question on the conductors. We can see premium products delivering strong growth. And I understand that this is primarily because of the domestic. Is it also the reason that gives us confidence of 30,000 plus EBITDA pattern? That is one. Second, has there been any impact on the U.S. EBITDA pattern? If you could just highlight negative or positive because of the recent developments of tariff.
No. So the EBITDA pattern for the U.S. markets across both conductors and cables have both obviously taken a hit. In the case of conductors, as I mentioned, the metal portion is much larger than in the case of cables. So the hit is taken on the non-metal portion of the product. But we have been able to pass on this hit to the customers. So if you look at our P&L, there is no net impact on our profitability both on conductors and cables in quarter two for the orders that have got executed in the P&L. So in this sense, if I drive your attention to the other expenses line, you can see an increase that has happened. So a part of that increase is due to import duty in the U.S., which you have to incur as a cost.
But at the same time, it has been billed to the customers. So there is no impact on the profitability for the two divisions for this September quarter. But going forward, as explained for the new orders which are coming in now, there will be a hit in terms of volume for a little while. And also, the margins will be a little less. Yeah. I hope that clarifies. Amitoj Singh?
Yeah. Sir, just on the premium products, what's driving this? Is it purely domestic or?
Y eah. Premium products are largely domestic. But we are trying to increase our geographic reach outside India also for these products now. It is at the beginning stage, but definitely, it is one of the efforts we are making so that with the difficulties, with some of the or the challenges in some of the markets like U.S. then we are trying to make up in other markets.
Is it fair to assume that gradually the EBITDA pattern in premium products is improving? Or has it improved in past five or six quarters?
It has remained pretty much at a decent level. Yeah. So there's no unit improvement in EBITDAs per ton, but the mix of that has continued to remain reasonably strong. So if you see copper transposed conductors , copper bus bars, all of these products, including HTLS conductors, they've all remained reasonably strong. The outlook for these products also remains good because all products which are having increasing demand in both short, medium, and long term.
Thank you so much, sir. All the best. Thank you.
The next question is from the line of Prathmesh Salunkhe from PL Capital. Please go ahead.
Hi, sir. Thank you for the opportunity. So since we're on cables business, now that we understand most of the cables's growth is coming from the US business and there is a dependency as of now, so I just wanted to know if and when this tariff situation resolves, what kind of impact we can see going forward? Can the cables business maintain this kind of growth in next year as well?
So my sense is that there will be a definite impact in Q3 of FY26 because there were two months of really no order inflow coming in. As we get into Q4 onwards, you will see again the momentum starting to pick up. There'll be practically almost no billing happening in Q3 with respect to the U.S. markets. In fact, I mean, I wouldn't say no billing, but a substantially lower billing taking place. The domestic market also, for example, if you see there's a lot of solar addition taking place, but all the string cables for solar are all copper-based. And if you see in the last 10 days, copper has reached almost all-time high prices, touching close to $12,000 before it has come off. So there is a little bit of disruption that has happened in there where developers are just holding back because they have all quoted on a fixed price basis. So there is a little bit of a disruption, which is there. We see that will probably all play out in Q3. Then from Q4 onwards, we start seeing business volumes again increasing, both domestic as well as export.
Okay. Also, sir, we are doing quite a mix in cables business, expanding our capacity across the cables. So wanted to understand what kind of revenue we might get from cables like maybe elastomeric cables. What were the revenue figures for elastomeric FY24, FY25? And then with increasing capacity, what kind of revenue we can get from such cables? So we understand sort of trend.
Yeah. So we've been historically giving a breakup in terms of the sub-cables types. But all I can tell you is that we've been guiding a growth of 25% year on year. The first half has delivered something far in excess of that. There will be a bit of a blip that happens in Q3. But as you go forward Q4 onwards, we will continue to see this increase. We have not reduced anything in terms of the CapEx that the company has announced. We are going ahead with all our CapEx plans because we believe fundamentally that the demand is going to continue to remain strong.
So on the renewable side, on the contrary, if you see the amount of growth happening on the wind side has also been very strong. And APAR has a very strong position in the cables that go into windmills. So we've been seeing a good growth on that front as well. In Q2, you will see windmills don't get added because to erect a windmill with the monsoon and the winds being at high levels, generally, that's the slow period. As you get into Q3, Q4, you'll see segments like wind, railways, all of these things on the domestic side picking up. And from Q4 onwards, we'll see again U.S. export revenue getting booked. So I hope that kind of gives you the picture.
Yes, very helpful. Thank you so much for my questions, sir. All the best. Thank you.
The next question is from the line of Nitin Arora from Axis Mutual Fund. Please go ahead.
Hi, sir. Thanks for taking my question. Just on this awarding side, because I know you've been sounding cautious over the last two, three quarters because of the tariff part as well, but you're over-delivering every quarter. Every quarter, I think the growth has been very strong. Just on when you said that Q3 orders, especially only on the U.S. market, there were no bookings. And from Q4 on and Q3, you have started seeing orders also coming in. When these orders are coming in, is it purely on the conductor and cables, and it's again the renewable CapEx where the customers are decided? Because when we look at the global data of renewables, that is not falling. The ordering has been very strong. And obviously, when you said to meet the deadline of the IRA incentives there. So is just the U.S. revenue part which you see some slowness coming in Q3, and Q4 is where you again start seeing a bump up? And is the order run rate, the similar kind of a run rate what you're getting now, the inquiry and the order run rate? If you can just clarify that.
On the order flow, this constant inquiry has been coming even through this entire period where there was no real orders getting finalized. But we've seen a large intake come in at the end of, through the Diwali, the last week of October, early in the last 10 days. A whole spate of orders has come in from the U.S. market. So we've had to adjust our pricing to some extent. Customers have absorbed a portion of the duties at their end. They've also come to realize that even the local domestic players have had to adjust the prices upward because all aluminum, the U.S. imports almost 90% of its aluminum. So those prices have also got adjusted. The local prices of aluminum have got adjusted up to that extent. So this was a whole period where things needed a bit of settling down.
Then now this order inflow has come. So you'll see a reasonably strong execution happening from November onwards. It's all directly the orders which are getting finalized first are all coming from the renewable energy side in the US. Both on the solar and the wind side. APAR exports actually cables that go into the wind side also in the U.S. But the solar is much larger in terms of the volume.
Got it. That's very helpful, sir. That's all I wanted to know because it's just a yeah.
On the conductor side as well, wherever customers need to place orders for the conductors to prevent their schedules getting disrupted. We started seeing some inflow of those orders coming in as well. So if you see the growth which we have shown, if you take FY25, we had done almost INR 1,600 crores of conductors and cables put together. And if you look at FY26 in the first half, we've done almost a similar number. And this is because APAR has also been working very hard in increasing market access, as in getting approvals from customers, etc., etc. And our belief is that at some point in time, this tariff situation will get sorted out. And then as it gets sorted out, the larger access will be available based on all these approvals which we've been working on, including through this current period.
Got it. It's just a month or a two-month phenomenon which you saw. And then again, things are getting back on track. This is just getting a little bit.
Yeah. There is no pressure on the margin because we've had to absorb part of it. Customers have absorbed part of it. And these markets take many, many years to build. And so as a strategy, we've decided that we do not want to let up on products going into these markets and into these customers because the tariff problem, our belief is it will get sorted out at some point in time, in which case there will be more parity in terms of our ability. We've also invested a lot of money not only in equipment but also in manufacturing practices, processes, etc., where the products are optimized for the U.S. market from our plants in India. And so as this tariff situation gets sorted out, I think you'll see a surge taking place in business going to the U.S. But we have to still wait and watch until that happens. In the meantime, business has restarted.
So just one thing on the domestic market. As you rightly said, transmission is something which took a little hit. But when we look at the backlog of thermal projects and state distribution, that ordering, what we were seeing was quite healthy still in the first half. So domestic, though you have guided for a 25% growth in cables and conductors also, you've been doing very strong growth. From the domestic side, do you see any challenges on the growth, or you still think the momentum will continue in that 20% plus range and premium product contribution continues to increase?
So we don't see really any fundamental challenges on the domestic side. The short-term issue has clearly been a right of way. Also, there is a change that many of the customers are putting in the way in which you can do the billing. See, previously, even in government projects, railway projects, many other agencies, you could bill. There was a separate billing of product and then billing of the services that you had. So you could supply the product part earlier in the cycle compared to the services part. Today, everything is now moving towards milestone billing. So if your right of way doesn't come through, then you don't want to order the material because you can't then bill it further to the client. Your payment is now more milestone-based in terms of how you execute. So a few of these things have played out because of which there is likely to be a slightly slower movement happening in Q3. But keep in mind that Post-Diwali, that means from November through till March is the best construction season in the country. So everyone is working overtime on getting right of way. And as those come through, you will see the conductor offtake starting to pick up.
Thank you very much for all the.
There is this backlog, as was mentioned in the opening remarks, that substations have outstripped actually the lines going in. So there will be a demand that will come up for the lines. Hello, can we go ahead?
Yes, thank you. The next question is from the line of Nitisha from ICICI Securities. Please go ahead.
Yes. Thank you so much for taking my question. My question is on the expansion of the conductors. What is the progress on that, and by when do we expect the entire capacity to come online?
It is all going as per schedule. Almost all the product lines, we are increasing our capacity. And we envisage that the bulk of it will be done by March 26, and some part of it will get done by the Q1 of the next financial year.
And my second question on the conductor side is that what do you think is the outlook on the conductor side for the domestic market, given that not a lot of players are increasing capacity on the conductor side? Not many players exist in this space as well.
So on the conductors, we are making several different types of products. So there is one product group which is on the copper side, which we are seeing that there is a fair amount of growth that we expect. Therefore, we are expanding. And you're right. Relative to the demand, the increased capacity may not be so forthcoming. On some of the conventional conductor side, aluminum side, we see that the supply demand may be not so great for us because new capacities are coming in. And as we discussed, there is a little slowdown. And we are building our capabilities on the premium products of the aluminum conductors. So that is also expected to grow.
Thank you.
With the reconductoring projects, yeah, of HTLS and OPGW. Yes.
Yes. Thank you. All right. Thank you.
The next question is from the line of Kunal Sheth from B&K Securities. Please go ahead.
Yeah. Hi. Good evening, sir. Thank you for the opportunity. Sir, you did mention about the conductor CapEx that are likely to come by March. We are also investing about 800 crores in cables division. So what is the status there? When is the capacity likely to come up there?
So in the case of cables, the first phase of equipment is coming in in the January-March quarter. And the balance will all arrive in the April-June quarter. So by the June quarter, you will have pretty much everything having landed up at our sites. And then the commissioning will take place. So bulk of the commissioning, I would imagine, would be done by June of 2026, spillover of which would happen in the third quarter of next year, as in the quarter ending September of next year.
Okay. Basically, and then we'll see gradual ramp up in terms of utilization over the next few quarters.
Absolutely.
Okay. Sure. And my second question.
Equipment enough to meet our operating plan for this year. The timing of the CapEx is such that it times in to then allow for further increase happening from the next financial year onwards.
Got it, sir. Sir, my second question is relating to conductor segment. The share of, sir, premium products there is about 45% in Q2 and about 44.5% in H1. Is there a number that we have in mind here? Basically, what I'm trying to understand is where can this share go up, given that we are still focusing on a lot of premium products and introducing a lot of specialty products?
The copper side is a separate bucket by itself. But when you look at the aluminum side, which is consisting of HTLS and all these premium conductors where we not only supply the conductor, but we also actually install it. That part of the market is actually a growing market. There is a lot of work going on in there. Government policy also is being worked upon to improve and increase the amount of reconductoring efforts that are going to happen in the country. So the equipment is actually fungible. So as the HTLS demand increases, we are in a position to increase the production of those type of conductors. So I don't see a limiting factor on that number, saying that we want to grow only up to a certain percentage. If there is a huge reconductoring demand that comes up, we would like to produce practically everything as HTLS.
Okay. Got it. Got it. So basically, it's more constrained by how demand shapes up rather than our capacity.
Exactly. So as we've put in all the new CapExes, we've made sure that equipment is fungible to produce a much wider range of premium products.
Got it, sir. Thank you so much, and best of luck for the future quarters.
Thank you. The next question is from the line of Mr. Achal Lohade from Nuvama Wealth Management Limited. Please go ahead.
Yeah. Good afternoon, sir. Thank you for the opportunity. Sir, just a few clarifications. One, in terms of the pricing, you did mention that you lock in the price, so there is no impact on the margin. But in terms of, let's say, copper has gone up from $10,000 to $11,000, so do we mark up basis the absolute rupees per ton, or we mark up basis the percentage? If you could clarify for both conductor and cables.
The price variations would run on the basis of absolute change in the price. It would not be based on a percentage change in the price. The price variation formula is based on the absolute change in the price. What I meant was that we hedge our position completely, so we don't take any speculative risk on the price of the metal movement, either upward or downward.
Yes, yes, fair. So what I wanted to check, and correct me if I have got it right, so essentially, whatever is the price, we add rupees per ton margin on that. Have I understood right?
So I'll give you an example. So if a customer is placing an order on a provisional price basis with a certain delivery schedule, then as we come closer to the actual offtake month, then he has to finalize the price. And then there is a price variation formula which updates the price. So when he updates the price, we lock in on that updated price. We take the LME position. I hope that clarifies.
Understood. Okay. Okay. Yeah. And is it similar for conductors and cables both, or it's different for both the products?
No, no. So every product has its own price variation formula depending on the composition of the product. But the delta that takes place is fundamentally related to the metal itself, to the change in the price of the metal itself.
Understood. The second question I had, sir, in terms of export for both conductors and cables, if you could clarify how much is for the U.S., what would be the U.S. mix out of the exports for conductors and cables separately?
Given it for the last year, full year, it was about INR 1,600 crores that we did. And as we just explained on the call, for the first half of this year, we have already done INR 1,600 crores across cables and conductors in the U.S.
Understood. The third question I had, given the current capacity, what is the potential revenue, assuming the current price of the metal? Are we operating at a 60% utilization, 50% utilization, 90%? If you could give some clarity on that. And what is the additional capacity quantum which is coming on board?
So if you were to look at both the conductor and the cables side today, in terms of operating capacity, we are at 75%. In the conductor side, about 75-80%. And then we are adding capacity going forward. On the cables side, also, we are at about 80-85% capacity. But in certain product categories, we are running at 100% utilization. The expansions that we put in are going to enable us to support the growth that we've been guiding for FY26 and FY27. Understood. And if it's just. And it will be on that as well. Because a lot of new factory facilities are also coming up, so you can then start adding production lines to further increase, especially on the cables side. A new 66-acre plot is being fully developed, which would then allow, beyond whatever we are putting in this INR 800 crores, we can incrementally then start increasing by then putting in production lines.
Got it. If you could quantify, what is the CapEx target for FY26, 27, and 28? A ballpark number.
Yeah. For FY26, we have about INR 1,300 crores is the ballpark CapEx across all the three divisions. But 27 and 28, we don't have at the moment.
But is it fair to say it will be INR 1,000 crores plus, or it could fall?
It's unlikely, unlikely because we are going to spend a big amount this financial year to build capacities and infrastructure that will last for the next few years. So the CapEx for the following years will be substantially lower than what we will incur in FY26. So let me put it in a slightly different way to the same question that we are putting in CapEx, which is good for over two years of expanded capacity. And we are doing this in advance because in the past, what has happened is that we have always allowed capacities to reach 85%-90% levels and then added. Given today's time frame where capacity addition timings are much more complicated and difficult to achieve, we are putting this CapEx in advance.
So the reason why Ramesh is saying that when you look out beyond this, depending on the way demand is picking up and the product lines where we are seeing more traction, we would then go in and start putting in equipment that's more specific to that. So two years plus expansion is already clearly happening with this CapEx.
Wonderful. And just last question with respect to the reconductoring opportunity. If you could give some more sense, sorry, I missed the initial part if you kind of said in that context. But if you could repeat for the reconductoring opportunity in India.
No, no. So what I mentioned, I didn't mention anything in the opening remarks and answering one of the questions I mentioned that the reconductoring opportunity, according to us, reconductoring is absolutely the best way to go forward for the following reasons. Number one is that it's significantly cheaper than putting up a new line. Secondly, it is much faster, and it is in the hands of the utility to give you the outage to actually put the lines up. So there's no right of way required or no third-party permissions which are required. And the third thing is that if you choose the right design, you can actually increase the throughput of power by 150% more or 200% more. So if you're carrying 100, you can go up to 250 or 300, depending on the configuration of the line that you end up choosing. So when you look at this in a country like India, which is resource constrained, this is clearly the best way to go. So our sense is that more and more of this reconductoring will have to come up.
We've also been lobbying with CEA, saying, "Please allow new lines to be laid with the top-end conductors, which is with the HTLS," etc., which so far has been focused only on reconductoring projects. So this is also being considered by the Central Electricity Authority because keep in mind that you hear a lot of data centers going into the U.S., but there's a lot of data centers going in India as well. They're much smaller in size than the U.S. hyperscaler ones. But there is a lot of data centers going in, and they do require a large amount of energy to run. So we believe that a lot of reconductoring projects are going to come up, and it will only accelerate with the addition of data centers and other energy-intensive assets which get installed.
Any quantifications, sir, in terms of annually, how large is reconductoring at this point in time, and how large can it become in three and five years? Any quantification?
So actually, the government is working on a new reconductoring plan. So they have taken out a renewable energy, 500-gigawatt renewable energy blueprint for the country. So they are working on a transmission and reconductoring plan. A transmission plan also has been released, but the reconductoring plan is something that is being worked at. Our sense is that, see, it's largely demand-driven. And mostly, it is in the urban areas currently or in the areas where there is more power requirement to be fed. But over a period of time, what is currently a niche application may become a more full-fledged requirement and a mainstream product. So it's difficult to gauge what percentage growth will be there, but it can really have a good growth going forward. Also, a lot of expertise is required in that. It is not a very simple thing to do, A, to manufacture the HTLS, and B, then to do the installation.
Understood. Thank you. I'll fall back in the queue for follow-up, sir. Thank you so much.
Thank you. The next question is from the line of Amitoj Singh from B&K Securities. Please go ahead.
Thank you, sir, for taking my question, and congratulations on a great set of results. My question was on the subdued ordering activity seen in August and September. I just wanted clarity that this was primarily a result of Section 232 tariffs and higher metal prices, or they were a result of higher reciprocal tariffs?
So I think it's a combination of both because, to a large extent, it was also because of 232. So in the case of all the tariff increases reciprocally, you would have noticed that a notice period was given of several months. And then a date was declared effective, so-and-so date it will happen. When India was slapped a 25% penalty, the time frame was shorter. But in the case of 232, it allows the government to impose it as of the date as of the time that they declare it. So it becomes effective from 12:01 A.M. the next morning. So it was so sudden, and 400 categories of products were added in there. So obviously, it took time for an evaluation in terms of what is going to be the impact.
Even local domestic suppliers took time in terms of figuring out how things were going to fix and get rebalanced. People who had materials that were already in the country obviously could sell it at a lower price. So there was quite a lot of confusion in that time frame. I would think that 232 was the single largest factor for it. Reciprocal tariffs of countries also did not get declared overnight in one shot. If you see, they were being announced country by country. So the whole thing actually resulted in a couple of months where things needed a bit of settling time.
Got it.
Because I also hope that everybody's had at our end as well as our customers' end that there will be a deal between India and the U.S. There was a period where there was a complete stalemate. Nothing was happening. Now, at least in the press, it seems like there is some positive movement. And I mean, if the trade deal happens, then it will only accelerate whatever our business is over there.
Got it . This was because my question was mainly focused on knowing that if this was largely an effective reciprocal tariff, then did we see any market share erosion in the U.S. primarily? But now that I think most of it is, I can confirm that most of it is due to Section 232 tariffs, the subdued ordering activity. Yeah. Got it. Got it. And sir, on the CapEx, I just had a few questions. So out of the 13 million CapEx, how much of it do we have incurred till 1H, FY26? Yeah.
So, about INR 400 crores we have for the company as a whole. We have incurred INR 400 crores of CapEx in the first half of the year.
Okay. Got it. And on the cables side, we had guided that this CapEx of INR 8,000 crores sorry, INR 800 crores will result in revenue-generating capacity of around INR 10,000 crores. So
Yeah.
Over a period of time. Over a period of time. So INR 800 crores.
This INR 800 crores increase in CapEx will result in an immediate increase that happens of around INR 6,000 odd crores. So from INR 5,000 crores which we started with, we will be able to end up at about INR 10,000 crores. Plus, the infrastructure is set up on the 66 acres. Now, as you start adding new product, meaning new equipment and stuff, then a, the time frame for installing it is much faster, and then you will get a much higher revenue versus the incremental CapEx that you put in.
Got it. Got it. Got it. I think that is it from my side. Thank you for answering my questions. Thank you.
Yeah.
Thank you. Due to time constraints, this was the last question for today's conference. I now hand the conference to Mr. Kushal Desai for closing comments.
Yeah. I'd like to take this opportunity to thank everyone for your time to attend our earnings call. Just a quick summary in line with the closing remarks that I had. We see that all the fundamental drivers of our business continue to remain strong. There is a short-term impact, as we've explained in detail, that is going to hit us in Q3, especially from business in the U.S. The order inflow from there has already started, so you will start seeing a better position happening in the fourth quarter of the year. The domestic side on conductors was affected to some extent due to right of way issues. Our expectation is that as we run through the second half of the year, that will also get sorted out, and once that's done, there's a wonderful execution period available between now and 31st of March. Overall, we stand quite optimistic in terms of the way in which the business is growing, albeit a short-term problem which we'll see in Q3, so with that, I'd like to close the call, and thank you very much for your time.
On behalf of APAR Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.