Apcotex Industries Limited

Apcotex Industri reported strong financial results for Q2 and H1 FY26. In Q2, Operating EBITDA increased by 48% YoY to INR 41 crores, with a margin of 12.06%, and PAT grew 130% YoY to INR 25 crores. Despite a 4% YoY decline in Q2 revenue to INR 337 crores due to lower realizations, overall volumes increased by 11%. For the first half of FY26, Operating EBITDA rose 34% YoY to INR 79 crores on a 4% YoY revenue increase to INR 713 crores, with PAT up 73% YoY to INR 45 crores. Overall volumes for H1 were up 18% YoY, significantly driven by a 31% YoY increase in export volumes.

The company's Board of Directors approved a substantial capital expenditure of INR 210 crores for capacity expansion at its Valia facility. This investment will add 37,000 metric tonnes per annum (MTPA) for synthetic latex and 14,600 MTPA for nitrile rubber and allied products. These additions are projected to generate a combined revenue potential of INR 550-600 crores. The expansion, financed through a mix of debt and internal accruals, is expected to be completed over six to seven quarters, with production commencing in a phased manner by Q1 FY27-28.

The notable improvement in gross margins and EBITDA margins (12.06% in Q2, 11.13% in H1) was attributed to increased capacity utilization across all plants, which are operating above 80%, with NBR and allied products near 95-100%. This high utilization, coupled with strategic approvals, allowed the company to build better margins and selectively decline lower-margin orders. Management noted that the chemical industry's market scenario has improved, contributing to better profitability.

The Directorate General of Trade Remedies (DGTR) issued final findings recommending anti-dumping duties, which management views as generally positive for the company. However, the official notification from the Finance Ministry is still pending, anticipated by December end. A significant concern is that one major NBR importer has been exempted from these duties, creating an uneven competitive landscape. Apcotex's expansion plans are based on current margins and zero anti-dumping duty benefits, indicating a cautious approach despite the positive recommendation.

Apcotex achieved a significant milestone by becoming net cash positive as of September 30, 2025, demonstrating strong financial discipline and cash generation. The company reduced its debt by approximately INR 53 crores in H1 FY26. The robust cash flow from operations, totaling INR 107 crores in H1 (comprising INR 87 crores from EBITDA and INR 20 crores from working capital release), was partly facilitated by lower raw material and finished goods prices, which reduced the absolute value of receivables and improved working capital management.

The company's product portfolio maintained a 30:70 split between Rubber and Latex for the quarter. Within the Latex segment, paper and construction contributed 16-18%, carpet textiles 11-12%, nitrile latex 15-16%, and tires/tire cord 10%. Apcotex aims to further enhance its export contribution, targeting an increase from the current 31% (for the quarter) to 35%, and eventually to 45% over the next one to two years, as part of its volume-led growth strategy and focus on operational efficiency.

Apcotex received the prestigious ICC award and Acharya P.C. Ray award for its development of indigenous technology, underscoring its commitment to innovation and self-reliance. Management expressed confidence that the new synthetic latex technology being implemented at Valia will be 'revolutionary for India,' offering superior productivity, cost, and quality. This strategic focus on next-generation technology is expected to provide a competitive advantage and enable the company to compete effectively in the market.