Hold Apcotex Industries; target of Rs 575: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Apcotex Industries

Apcotex reported revenue growth of 9% YoY to Rs 151.74 crore partly due to higher plant utilisation at Valia plant (NBR products) along with decent growth in the construction latex segment. There was a fall in prices of key raw materials like acrylonitrile, styrene on a QoQ basis. This led to some mark-to-mark inventory loss during the quarter, leading to lower OPM. Further, higher employee cost (up 26.7% YoY) during the quarter also put a strain on operating margins. OPM for the quarter fell 717 bps YoY to 9.2%, resulting in an EBITDA decline of 38.8% YoY to Rs 13.96 crore. There was deferred tax credit during the quarter to the tune of Rs 8.44 crore vs. Rs 1.19 crore in Q4FY18. This resulted in better bottomline growth. Further, higher other income (Rs 3.05 crore vs. loss of Rs 1.68 crore in Q4FY18) due to mark to market gain on investment portfolio also facilitated bottomline to post a positive performance for the quarter. PAT remained at Rs 15.28 crore (up 26.7% YoY). After a slow start, growth may pan out in subsequent quarters.

Outlook

Moreover, power plant at the Valia unit from next quarter could aid OPM, to a certain extent, and, thereby, return ratios. We value the stock at 18x P/E on FY21E and arrive at a target price of Rs 575. We maintain our HOLD rating on the stock.

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