Buy Apcotex Industries; target of Rs 598: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on Apcotex Industries

Apcotex reported revenues of INR 1289.9 mn (+40% YoY) broadly in line with our estimates of INR 1224 mn. The revenue growth is on account of restocking of inventory post GST implementation along with an increase in the revenue from NBR in domestic market post low imports from EU and SEA during the qtr. During the quarter, OPM expanded by 668bps YoY to ~11.7% primarily on account of low cost inventory (-152bps YoY). Further changes in product mix also assisted improvement in the overall operational performance. This helped EBITDA to surge by 225% YoY to INR 151.1mn. Higher tax rate (36% v/s 3% in Q2FY17) dragged bottom-line performance, which was up by 81% YoY to INR 84.8mn lower than operating profit growth.

Outlook
At CMP of INR 487, the stock has been trading at 13.7x on FY20E of our earnings estimates. We believe valuations are reasonable given the strong outlook of NBR segment along with other new products launches. However, considering the volatility of raw material price (mainly Butadiene) post uptick in the crude price, we have assigned p/e multiple of 17x on FY20E. We have arrived a target price of INR 598, an upside potential of 23%. We have ‘BUY’ rating on the stock.
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