Apcotex Industries Q4 Review - Realisations Remains Nimble, Volume Growth At Discretion: Axis Securities

Axis Securities Report

Apcotex Industries Ltd. exceeded our expectations in Q4 FY24, achieving significant growth in both revenue and profitability. Revenue reached Rs 311 crore, marking a notable 21% increase YoY and QoQ.

However, gross margins experienced a slight decline, standing at 30.3%, down by 119 bps compared to the previous quarter. Apcotex reported an Ebitda of Rs 31 crore, representing an 8% decrease YoY but a notable 23% increase QoQ.

This figure was in line with our estimate of Rs 32 crore. Despite this, the company reported Ebitda margins of 10.1%, down by 323 basis points YoY but up by 17 bps QoQ.

The company’s profit after tax amounted to Rs 15 crore, reflecting a 34% decrease YoY and a substantial 38% increase QoQ, surpassing our estimate of Rs 13 crore.

Despite being an import substitute in approximately 45% of its product offering, Apcotex Industries Ltd. faces the challenge of remaining price competitive against imports, resulting in lower realizations.

However, with changing demand-supply dynamics globally, we anticipate the company’s margin profile to rebound to historical levels in the coming quarters.

This rebound is expected as Nitrile Latex prices normalize and other segments scale up, potentially improving the company's competitive position and profitability.

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