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Axis Securities Report
Apcotex Industries Ltd. reported revenue of Rs 337 crore, marking a notable 21% increase YoY and 8% QoQ, in line with our estimate. However, gross margins declined to 26.7%, down by 359 basis points compared to the previous quarter.
Apcotex reported an Ebitda of Rs 32 crore, representing a 25% increase YoY and a 1% increase QoQ, missing our estimate of Rs 36 crore. The company reported Ebitda margins of 9.4%, up by 25 bps YoY but down by 65 bps QoQ.
Profit after tax amounted to Rs 15 crore, reflecting a substantial 22% increase YoY and a 3% decrease QoQ, missing our estimate of Rs 19 crore.
We marginally revise our estimates considering recent performance and persistent uncertainties in the sector. While we remain optimistic about a rebound in profitability, we are cautious about the potential risk of prolonged sluggishness.
We value the company at 15 times FY26E earnings, with a target price of Rs 451 per share, implying a limited downside of 3% from the current market price. We maintain our 'Hold' rating on the stock.
Key risks to our estimates and target price
Prolonged weakness in Latex Margins and other product margins forcing the company to switch to other products/reduced utilization levels.
Imposition of Anti Dumping Duties resulting in improved competitive position.
Faster-than-expected ramp-up in utilisation level in new plants.
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