Apcotex Industries Limited — Q1 FY26 earnings call

Call held 31 Jul 2025

Management summary

Apcotex Industries reported a strong Q1 FY26 with a 12% YoY revenue growth to ₹376 crores and a 22% YoY EBITDA growth to ₹39 crores, driven by record sales volumes and robust export performance. EBITDA margins expanded to 10.3%. While the Nitrile Latex segment continues to face margin pressure due to industry overcapacity, the company is planning de-bottlenecking and expansion projects to sustain growth and improve overall profitability.

Highlights

  • Operating revenue grew by 12% YoY to ₹376 crores.

  • Operating EBITDA increased by 22% YoY to ₹39 crores.

  • EBITDA margin improved to 10.3% from 9.45% in Q1 FY25, an increase of 85 bps.

  • Overall sales volumes achieved a 25% YoY growth, marking the highest ever quarterly sales volumes.

  • Export revenues surged by 37% YoY, now contributing 37% to total revenue.

Concerns

  • Nitrile Latex margins remain low due to industry overcapacity, despite high capacity utilization.

  • Domestic paper and construction markets remain challenging, contributing to a muted growth in ApcoBuild.

  • Geopolitical tensions and Suez Canal issues have affected lead times and business to certain export markets like Turkey.

Key financials

  1. Operating Revenue ₹376 Cr +12%YoY
  2. Operating EBITDA ₹39 Cr +22%YoY
  3. Operating EBITDA Margin 10.3% +0.85%YoY
  4. PAT ₹19 Cr
  5. PAT Margin 5.1%
  6. Sales Volumes Growth 25%
  7. Export Revenue Growth 37%
  8. Exports Contribution to Revenue 37%

What they filed

Q1 FY27: revenue up 39.9%, net profit up 315.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue351 355 349 376 337 −4%331 −7%398 +14%526 +40%
EBITDA27 27 38 39 41 +52%44 +63%55 +45%117 +200%
Net profit11 12 17 19 25 +127%22 +83%35 +106%79 +316%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Investment in wind power SPV for renewable energy ₹3.5 Cr
    The total investment from Apcotex side for the Gujarat project is, I think, around 3.5 crores, or give or take 3.5-4 crores.
  • Debt Debt disclosed
    our debt equity ratio is anyway, currently, it is at 0.3 and I mean, it would maybe go up slightly in the short term, but not significantly.

Guidance & targets

Revenue

  • Total Revenue Revenue · within 3 years (or early next year) · Medium confidence ₹1,600-1,700 crores
    we would be looking at about 1,600 to 1,700 crores in about 3 years. I think we are on a run rate to get there. If not this year, then early next year, a quarterly run rate.

    — Abhiraj Choksey

Market Share

  • Exports Contribution to Revenue Market Share · by next year · Medium confidence 40-45%
    about 40% to 45% would be exports out of that and I think that's where we will end up by next year, somewhere between 40-42%.

    — Abhiraj Choksey

Profitability

  • Overall EBITDA Margins Profitability · long-term perspective · Medium confidence 14-15%
    we are targeting around 14% to 15% kind of margins.

    — Abhiraj Choksey

  • Nitrile Latex Margins Profitability · Low confidence mid-teens or early-teens
    Nitrile Latex margins that we need to ensure that that comes up to the mid-teens or early- teens.

    — Abhiraj Choksey

  • Overall EBITDA Margins (market improvement) Profitability · Low confidence 12-15%
    the market needs to improve for us to go back to about, 12-15% EBITDA margins

    — Abhiraj Choksey

  • ROCE for new projects Profitability · High confidence 20-25%
    we look at, an ROCE of at least 20-25% between that number. Below that, we that's generally our threshold.

    — Abhiraj Choksey

  • Company ROCE Profitability · Medium confidence 18-19%
    we would be closer to 18-19% ROCE. It's not more. In fact, Q1 also the ROCE, I think, has been 18-plus percent.

    — Abhiraj Choksey

What to watch in Q2 FY26

Announcement of expansion/de-bottlenecking projects

next quarter or earlier
Current Plans being finalized
Target Detailed announcement of projects and CAPEX

Why it matters

New projects are crucial for future growth and capacity utilization beyond current levels.

So, we will be planning certain de-bottlenecking and expansion projects which we will announce shortly once the details are finalized.

Risks & concerns

  • Industry overcapacity in Nitrile Latex and gloves

    high

    Overcapacity in the industry is keeping Nitrile Latex margins low despite high company utilization.

    Management acknowledged

  • Geopolitical tensions and tariffs

    medium

    Uncertainty around tariffs and geopolitical tensions, including Suez Canal issues, affects trade flows and lead times for exports.

    Management acknowledged

  • Challenging domestic market conditions

    medium

    Paper and domestic construction markets remain muted, impacting growth in related product segments like ApcoBuild.

    Management acknowledged

  • Raw material price volatility

    medium

    Raw material prices (butadiene, acrylonitrile) are hard to predict and impact NBR pricing.

    Management acknowledged

  • Import dumping in NBR market

    medium

    High share of NBR imports is due to dumping, leading to an ongoing anti-dumping case.

    Management acknowledged

Q&A highlights

6 direct
Export performance and future strategy Direct
Overall, I think once, if you recall and I think you have been there on previous calls, when we did about 200-odd crores, 220 crores of expansion, which we commissioned in March-April 2023, March 2023. So, it has been a little over two years and we had said that at that time we were a little over 1,000 crores in revenue. And we had said that with these expansion projects, we would be looking at about 1,600 to 1,700 crores in about 3 years.

Analyst sought clarity on the sustainability and strategic direction of the strong export growth, and management provided a long-term revenue and export contribution target.

Asked by Dhaval Shah

Nitrile Latex margins and EBITDA growth Direct
Yes, I think the reason why is because the average EBITDA margins for Nitrile Latex are much lower than our average EBITDA margins, and obviously good growth has come from there. So, in spite of getting some operating leverage due to increase in quantities, the truth is that Nitrile Latex margins are still not great because of overcapacity.

Analyst questioned why EBITDA growth didn't fully reflect volume growth, leading to management explaining the drag from low Nitrile Latex margins due to overcapacity.

Asked by Aditya Khetan

CAPEX plans and long-term margin targets Partial
Yes, I think, look, we should have enough capacity for this year, for this financial year, and perhaps for some amount of next financial year as well. We will come back to you with, as I told the previous caller as well, Mr. Aditya, that we will come back to you with the exact expansion plans perhaps by next quarter or maybe even earlier than that if you are ready to announce.

Analyst inquired about specific CAPEX plans and funding, but management deferred the detailed announcement to a later date, indicating plans are still being finalized.

Asked by Balasubramaniam

Impact of US tariffs on Chinese gloves and geopolitical conflicts on exports Direct
So, to answer the first question, yes, the tariffs on China have sort of upended the glove supply chain overall and our customers tell us that non-U.S. markets, there is more competition because of China. However, as we are a small percentage of the total latex manufacturing for gloves. So, I think our customers are, overall, I think there is a benefit with what has happened for our customers.

Analyst asked about external factors affecting export markets, and management confirmed increased competition in non-US markets due to redirected Chinese supply and impact on carpet segment exports to Turkey/Egypt.

Asked by Balasubramaniam

Nitrile Latex utilization and industry margins Direct
So, yes, we have been fortunate. Honestly, we have a small plant compared to some of the global giants and we are the only company in India, glove manufacturing in India has increased in the last couple of years. We are able to export to Southeast Asian countries. There is India-ASEAN FTA. So, there is no duties. Freight is quite reasonable to these countries. So, as a result of which, we have been able to improve our capacity utilization. But the reason why margins have not improved is because of overall industry utilization rates. We are not able to drive the prices that we would want.

Analyst probed on the disconnect between high company utilization and low Nitrile Latex margins, leading management to clarify that overall industry overcapacity prevents price increases.

Asked by Rohit

ROCE outlook and product application in new-age manufacturing Direct
Yes, look, before we embark on any project, unfortunately, the ROCE has been lower and been pulled down by Nitrile Latex for the last couple of years. Otherwise, it would have been even higher because then we definitely not got the returns that were expected when we embarked on the project. Overall, when we embark on any new project, which is any significant investment, we look at, an ROCE of at least 20-25% between that number.

Analyst questioned the company's ROCE trajectory and its application in emerging tech, with management explaining the Nitrile Latex drag and their ROCE threshold for new projects.

Asked by Dhaval Shah

NBR market and import dumping Direct
There is a lot of dumping happening as well which is why we are fighting the anti-dumping case and for example China has imposed a duty of I think anywhere between 12% to 20% on imports from Korea. So, they have they have levied an anti-dumping duty and it has been going on for the 6th year.

Analyst asked about the high import share in NBR, and management highlighted the ongoing anti-dumping case and the impact of dumping on domestic players.

Asked by Mirav

3 min read 8 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Apcotex Industries reported a strong Q1 FY26, with operating revenue reaching ₹376 crores, marking a 12% year-on-year growth. Operating EBITDA increased by a robust 22% year-on-year to ₹39 crores, leading to an improved EBITDA margin of 10.3%, up from 9.45% in Q1 FY25. Profit After Tax (PAT) for the quarter stood at ₹19 crores, with a PAT margin of 5.11%. This performance was primarily driven by the highest ever quarterly sales volumes, which grew by 25% year-on-year.

Robust Export Growth and Strategic Importance

Exports were a significant growth driver in Q1 FY26, with export revenues increasing by 37% year-on-year in rupee terms. Exports now contribute a substantial 37% to the company's overall revenue, marking the highest ever contribution. Management aims for exports to reach 40-45% of total revenue by next year, targeting a total revenue of ₹1,600-1,700 crores within three years. This strategy diversifies revenue streams beyond the domestic market, which has historically been the primary focus.

Nitrile Latex Business Challenges and Margin Pressure

Despite high capacity utilization of approximately 90% in the Nitrile Latex plant in Valia, margins for this segment remain low due to industry-wide overcapacity. While the company has achieved consistent sales volume growth for six consecutive quarters and benefited from operating leverage, the overall market conditions prevent significant margin expansion. Management noted that without the Nitrile Latex segment, overall margins would be a couple of percentage points higher, and they are targeting Nitrile Latex margins to improve to the mid-teens or early-teens in the long term.

Future Expansion Plans and Capital Expenditure

Apcotex is planning de-bottlenecking and expansion projects, which will be announced shortly once details are finalized. These projects will focus on latex, SBR latex, styrene acrylics, and NBR, aiming to increase capacity utilization further. The company expects to have sufficient capacity for the current and part of the next financial year. Funding for future CAPEX is expected to be a combination of debt and internal accruals, with the current debt-equity ratio at 0.3, which is expected to increase only slightly.

Industry Dynamics and Raw Material Volatility

The environment remains uncertain due to tariffs and geopolitical tensions, impacting trade flows and raw material prices. The company noted that US tariffs on Chinese gloves have upended the glove supply chain, leading to increased competition in non-US markets. Raw material prices, particularly for butadiene and acrylonitrile, are volatile and difficult to predict. The domestic paper and construction markets are also experiencing a slowdown, affecting demand for certain products.

Sustainability Initiatives: Wind Power Investment

Apcotex has invested approximately ₹3.5-4 crores in a wind power SPV in Gujarat. This initiative is primarily driven by the company's commitment to ESG principles, aiming to reduce its carbon footprint by sourcing more power from renewable sources. While commercially viable with a good IRR, this investment is not expected to significantly impact the company's total EBITDA. Plans for similar investments in Maharashtra were affected by recent rule changes.

NBR Market and Import Competition

The NBR market in India faces significant competition from imports, with 70% of the product currently sourced from outside the country. This is largely attributed to dumping practices, leading Apcotex to actively pursue an anti-dumping case. Management highlighted that countries like China have imposed anti-dumping duties on NBR imports from Korea, indicating a similar issue in other markets. The resolution of this anti-dumping case is crucial for improving domestic NBR market conditions.

ApcoBuild Performance and Outlook

The ApcoBuild segment experienced a challenging Q1, with muted growth, reflecting the broader slowdown in the Indian construction market. Management acknowledged the difficulties but expressed optimism about returning to a positive growth pattern by the end of the year, expecting good annual numbers. The company is also implementing internal manpower changes to support this segment's growth.

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