Buy Apcotex Industries; target of Rs 772: Anand Rathi

Anand Rathi's research report on Apcotex Industries

Apcotex Industries Limited (AIL) is one of the leading producers of Synthetic Rubber (NBR & HSR) and Synthetic Latex (Nitrile, VP latex, XSB & Acrylic latex) in India. Started as a division of Asian Paints in 1980 for producing Vinyl Pyridine latex and Carboxylated Styrene-Butadiene latex in India. It has transformed itself into a niche synthetic latex & rubber producer and as of today the company is one of the few companies to produce broadest range of emulsion polymers. The company’s Synthetic Rubber finds application in broad range of products such as Automotive Components, Hoses, Gaskets, Rice De-husking Rollers, Printing and Industrial Rollers, Friction Materials, Belting and Footwear. Apcotex’s range of Latexes are used for Paper / Paperboard Coating, Carpet Backing, Tyre Cord Dipping, Construction, Glovesexamination, surgical and industrial use etc. Apart from having a diversified clientele Apcotex is present across diversified industries which protects Apcotex from any slowdowns in a single industry. As of FY21 no single industry contributed above 20% of its revenues.

Outlook

We expect Apcotex’s Revenue/EBITDA/PAT to grow at a CAGR of 18%/21%/16% respectively by FY24 with margins being relatively stable. We initiate our coverage on Apcotex Industries Limited (APCOTEXIND)with a BUY rating and a target price of ₹772 per share.

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