Apcotex Industries Limited — Q2 FY26 earnings call

Call held 6 Nov 2025

Management summary

Apcotex Industri delivered strong Q2 and H1 FY26 results, marked by significant EBITDA and PAT growth driven by volume expansion and margin improvement, despite a slight revenue decline in Q2 due to lower realizations. The company achieved net cash positive status and announced a substantial INR 210 crores capacity expansion at its Valia facility, targeting INR 550-600 crores in new revenue. While anti-dumping duty notifications are pending and NBR capacity is tight, management remains confident in its strategic investments and technological advancements.

Highlights

  • Q2 total volumes increased by 11% YoY.

  • Q2 Operating EBITDA grew significantly by 48% YoY to INR 41 crores, with an EBITDA margin of 12.06%.

  • Q2 Profit After Tax (PAT) surged by 130% YoY to INR 25 crores, achieving a PAT margin of 7.51%.

  • For H1 FY26, overall volumes increased by 18% YoY, and export volumes grew 31% YoY, reaching a new high.

  • The company became net cash positive as of 30th September 2025, and reduced debt by approximately INR 53 crores in H1 FY26.

  • Board approved a significant INR 210 crores capacity expansion at Valia, projected to add INR 550-600 crores in revenue potential.

Concerns

  • Q2 operating revenue declined by 4% YoY to INR 337 crores, primarily due to a fall in raw material prices and lower realization in finished goods.

  • Uncertainty remains regarding the full impact of anti-dumping duties, as one major NBR importer has been granted zero duty, potentially creating an uneven playing field.

  • Management noted that NBR capacity is almost full, and the company might face volume growth constraints in this segment for the next three quarters until new capacity comes online.

Key financials

2 periods

Q2

  • Operating Revenue
    ₹337 Cr
    YoY -4%
  • Operating EBITDA
    ₹41 Cr
    YoY +48%
  • EBITDA Margin
    12.1%
  • PAT
    ₹25 Cr
    YoY +130%

H1

  • Operating Revenue
    ₹713 Cr
    YoY +4%
  • Operating EBITDA
    ₹79 Cr
    YoY +34%
  • EBITDA Margin
    11.1%
  • PAT
    ₹45 Cr
    YoY +73%

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.

Segment breakdown

  • Overall Product Mix
    30% Rubber Share70% Latex Share
  • Latex Sub-segments (Q2)
    16% Paper and Construction11% Carpet Textiles15% Nitrile Latex10% Tires/Tire Cord30% Remaining Rubber

Capital allocation

high confidence
  • Capex ₹65 Cr debt and internal accruals
    • Expansion projects (part of INR 210 crores total) ₹20 Cr
    • Maintenance, solar projects, cost saving projects ₹40 Cr
    The total projected capital expenditure will be spread over next six to seven quarters. This will be financed through debt and internal accruals, a mix of it. So, overall, I think this year, we expect a total CAPEX of about Rs. 65 crores, out of which probably about Rs. 20 crores to Rs. 25 crores will be for the expansion projects.
  • Debt Debt disclosed
    we have also reduced debt by approximately INR 53 crores. This demonstrates continued financial discipline and operational strength. We are also happy to inform that the company has turned net cash positive as of 30th September 2025.
  • Liquidity Liquidity disclosed Company turned net cash positive as of 30th September 2025, with H1 cash flow from operations of INR 107 crores (INR 87 crores from profits and INR 20 crores from working capital release).
    We are also happy to inform that the company has turned net cash positive as of 30th September 2025. This reflects strong cash generation and good financial discipline. So, in this H1, you have generated Rs. 107 crores of actually cash flow from operations that you have never done in the last 15 years of history. Yes, that is correct. And just to also clarify, a large portion of Rs. 107 crores is from profits, which is EBITDA, which has come back into the kitty, so the internal accruals, and about Rs. 20 crores, which is released from working capital on a net basis.

Guidance & targets

Capacity

  • New synthetic latex capacity Capacity · Q1 FY27-28 · High confidence 37,000 MTPA
    The proposed capacity expansion is 37,000 metric tonne per annum for synthetic latex

    — Vivek Thakur

  • New nitrile rubber and allied products capacity Capacity · Q1 FY27-28 · High confidence 14,600 MTPA
    and 14,600 metric tonne per annum for nitrile rubber and allied products.

    — Vivek Thakur

Revenue

  • Combined revenue potential from new capacity Revenue · Post Q1 FY27-28 · High confidence INR 550-600 crores
    These two capacity additions have a combined revenue potential of INR 550 crores to INR 600 crores.

    — Vivek Thakur

Market Share

  • Export contribution to revenue Market Share · Next year or two · Medium confidence 35%, growing to 45%
    our endeavor is to be at around 35%, and over time grow it to 45% or so over the next year or two

    — Abhiraj Choksey

Other

  • Finance Ministry notification on Anti-Dumping Duty Other · December 2025 · Medium confidence By December end
    Generally, so we expect by before December end.

    — Abhiraj Choksey

What to watch in Q3 FY26

Finance Ministry notification on Anti-Dumping Duty

By December end
Current DGTR recommended, awaiting FM notification
Target Notification issued by FM

Why it matters

Will clarify market dynamics and potential profitability for the NBR segment, impacting competitive landscape.

The finance ministry still needs to notify those duties... we expect by December end.

Risks & concerns

  • Market uncertainty due to anti-dumping duty (ADD) notification

    medium

    The Finance Ministry's notification on anti-dumping duties is pending, and one major NBR importer has been granted zero duty, creating an uneven playing field and market uncertainty.

    Management acknowledged

  • Potential volume growth constraints due to NBR capacity

    medium

    NBR and allied products are operating at almost full capacity (95%), which could lead to volume growth limitations in the next three quarters until new capacity comes online.

    Management acknowledged

  • Margin pressure from other players expanding capacity

    medium

    Historically, capacity expansions by competitors have led to price pressure; management expects some impact for a couple of quarters but believes new tech will provide a competitive edge.

    Management acknowledged

  • Indirect impact of US tariffs on customer demand

    medium

    US tariffs have indirectly affected customers in textiles, technical textiles, tire, and carpet segments, impacting demand for Apcotex's products, though management hopes for resolution in 2-3 months.

    Management acknowledged

Q&A highlights

6 direct
Anti-Dumping Duty Notification & Impact Partial
The finance ministry still needs to notify those duties. Right now, it is just a recommendation from DGTR... for one particular manufacturer, there is zero duty. So, we have to see how the market plays out.

Highlights the ongoing uncertainty regarding the implementation and effectiveness of anti-dumping duties, particularly due to an exemption for a major importer, which could impact NBR segment profitability.

Asked by Rudraksh Raheja

Timing of CAPEX Commissioning Direct
The additional production is anticipated to come on stream in a phased manner by Q1 of FY'27-28. ...large majority of the expansion would be completed in around that time between March and May of 2027.

Provides a clear timeline for when the new capacity from the INR 210 crores capex will become operational, crucial for projecting future revenue and growth.

Asked by Dhaval Shah

Utilization of Expanded Capacity Direct
I mean, based somewhere between, I would say three years after it comes on board, comes on stream. That is our plan.

Gives an estimate for the ramp-up period of the new capacity, indicating that full utilization will take several years post-commissioning.

Asked by Dhaval Shah

Gross Margin Improvement Drivers Direct
One, I would say main is that the chemical industry had a couple of good years post COVID... 2024 onwards was more challenging because a lot of capacity was added worldwide... We are at above 80% on average for all our products, in some cases, even close to 100%. So, that really helps in sort of improvement of margins.

Explains that improved capacity utilization and a better market scenario for the chemical industry, following challenging years, were key factors behind the strong margin expansion.

Asked by Rudraksh Raheja

Second Phase of Nitrile Latex Expansion Partial
it is definitely on the cards, although that is not what has been approved yesterday in the board meeting. We are keeping it on the cards, and we will see when to do that. The issue is with margins are still not healthy enough to justify additional capacity when there is already enough excess capacity worldwide, or at least in Asia, not worldwide.

Reveals that while further expansion for nitrile latex is considered, current market overcapacity and insufficient margins are delaying immediate approval, indicating a cautious approach to capital deployment.

Asked by Farokh Pandole

Volume Growth & Capacity Constraints Direct
For rubber, NBR, we are already at almost full capacity... for the next year or so, we will hit, not year, but about three quarters, we will hit a situation where we cannot grow further than this.

Highlights a potential near-term constraint on volume growth in the NBR segment, as existing capacity is almost fully utilized, which could limit top-line expansion until new capacity is available.

Asked by Saurabh Shroff

Raw Material Price Decline & Working Capital Direct
One of the reasons is because of the lower price at which the finished goods are being sold. So, that is one of the reasons why in absolute value, the receivables are much lesser. If you see the number of days, there also is an improvement. But absolute value reduction is largely because of the lower FG prices.

Clarifies that the company's strong cash flow generation and net cash positive status were significantly aided by lower raw material and finished goods prices, which reduced working capital requirements.

Asked by Manav Vijay

New Technology in Synthetic Latex Direct
We believe that the technology and the next level of technology is going to be even sort of the next generation technology better than what we have today. I think we are quite confident that what we are doing in the synthetic latex segment now going forward will be revolutionary for India.

Indicates a strategic focus on advanced technology in synthetic latex, aiming for a competitive edge through superior productivity, cost, and quality, which could differentiate Apcotex in the market.

Asked by Rudraksh Raheja

3 min read 7 chapters

Detailed narrative

Robust Q2 and H1 FY26 Financial Performance

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.

Strategic Capacity Expansion at Valia Facility

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.

Drivers of Margin Expansion and High Capacity Utilization

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.

Anti-Dumping Duty (ADD) and Market Dynamics

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.

Achieving Net Cash Positive Status and Working Capital Efficiency

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.

Product Segment Performance and Export Growth Strategy

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.

Commitment to Innovation and Advanced Technology

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.

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