Apcotex Industries LtdQ1 FY23Industrial Products

Apcotex Industries Ltd

Q1 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Revenue guidance

Category 2

→The company expects additional revenue of ₹600 to ₹700 crores from the new capacities at today's prices, potentially reaching ₹1,700 to ₹1,800 crores by FY26 (Page 19, Page 9).
→Full capacity utilization is anticipated within 2 years for new plants, with nitrile latex utilization expected to be faster due to growing market presence (Page 19, Page 7).
→Nitrile latex plant capacity of 50,000 tons expected to reach 40-50% utilization in the near term, with overall capacity growing by over 50% from 65,000 tons to 85,000 tons across plants (Page 14, Page 6).
→Exports have grown 16% volume-wise for FY23 and 28% in Q4, indicating strong growth potential in Southeast Asia and Middle East markets (Page 8, Page 5).
→Management is confident about the growth prospects in core industries such as construction, textiles, paper, and gloves in India and Asia (Page 20).
→Future growth plans, including possible new product launches and inorganic expansion, will be shared when appropriate (Page 16).

Category 3

→FY24 Profit Before Tax (PBT) expected to be affected by higher depreciation and interest due to large CAPEX (~₹220-230 crores), but focus will be on improving EBITDA.
→EBITDA expected to grow on an absolute basis, with a long-term target EBITDA margin of 17-18% after normalization of nitrile latex margins.
→Base operating EBITDA margin around 14-15%, with short-term pressure due to lower nitrile latex margins and raw material costs.
→Incremental revenue from new capacities expected to add ₹600-700 crores in top line within 2 years, aiming for full capacity utilization by FY26-FY27, reaching around ₹1,700-1,800 crores total revenue.
→Specialty and emulsion polymer space offer growth opportunities; company evaluating new products and inorganic opportunities, though no final decisions yet.
→Confident of filling new capacities within 2-3 years based on customer assessments and industry growth, mainly in India and Asia.

Get access to all 5 sections — revenue, margin, fundraise, orderbook, and capex — for Apcotex Industries Ltd and 1,400+ other companies.

Yes

→No explicit mention of any current or immediate future fundraising through debt or equity.
→The company has taken a term loan to partly fund a large CAPEX of around Rs. 220-230 crores in the last quarter; interest cost will impact PBT going forward.
→No new equity issuance or fundraising planned is indicated during the call.
→The company maintains a treasury reserve (~Rs. 90 crore) for potential non-organic acquisitions, growth, or quick expansion decisions.
→Final decisions on new projects like doubling NBR capacity will be taken after detailed engineering and market assessment in the coming months.
→Overall, management is focused on utilizing existing capacities and evaluating growth organically or through acquisitions, but no concrete plans for fresh fundraising disclosed.

→The company does not have contracts signed in advance before plant commissioning but maintains close communication with customers.
→Customers provide 3 to 5-year projections of their capacity expansions and expected demand for latex and binders.
→The company invests based on these market assessments and projections without written commitments.
→Current projects are both on-stream and progressing well with capacity expected to be utilized over the next few quarters.
→Projected revenue increase from new capacities is approximately ₹600-700 crores at current prices.
→Full capacity utilization is expected within 2 years from plants' commissioning.
→For nitrile latex, utilization levels are expected to be between 40-50% in the near term, with gradual increase.
→NBR project final investment decision pending, dependent on current CAPEX costs and market conditions.
→Overall growth plans and future order book updates will be shared in due course.

Yes

→The company has made a large CAPEX of around ₹220-230 crores recently, which came on stream in the last quarter.
→Depreciation and interest expenses will rise over the next two quarters due to this CAPEX, impacting PBT but not EBITDA.
→There is ongoing detailed engineering for an NBR (nitrile butadiene rubber) project; final CAPEX decision pending senior management approval in coming months.
→Nitrile latex capacity expansion includes converting a 10,000-ton plant to a 35,000-ton multipurpose latex plant, expected to reach full utilization by 2025.
→Overall capacity expansions expected to add ₹600-700 crores in revenue at peak utilization, with full capacity expected within 2-3 years.
→The company evaluates growth via organic expansion, new product pipeline, and inorganic opportunities but considers market and ROCE carefully before finalizing investments.
→Specialty raw material inventory build-up largely done post-CAPEX.

How does Apcotex Industries Ltd rank vs peers in Industrial Products?

Pro feature

1Apcotex Industries Ltd

Rev 2Mar 3

See full Industrial Products sector rankings

Want more stocks like Apcotex Industries Ltd?

Build an AI portfolio filtered by sector, market cap, and growth rank. Takes 2 minutes.