Apcotex Industri

Apcotex Industries delivered a robust Q4 FY25, with operating income growing 12.5% YoY to ₹349 crores, driven by a 15% increase in overall volume and a 22% rise in export volume. EBITDA for the quarter stood at ₹39 crores, a 23% growth, leading to an improved EBITDA margin of 11%, significantly higher than Q3 FY25's 7.63%. For the full fiscal year 2025, revenue from operations increased 24% YoY to ₹1,392 crores, with overall volume growth of 16% and export volumes up 24%. FY25 EBITDA was ₹125 crores (9.5% growth), and cash profit rose by ₹10.3 crores to ₹95.6 crores.

The company experienced a positive trend in profitability during Q4 FY25, with EBITDA margin reaching 11%. Management expects margins to normalize to 14-15% in the future, attributing this to increasing scale and the normalization of industry capacity utilization post-COVID. While short-term crude oil price volatility can impact margins due to inventory effects, the long-term outlook for margins is positive as industry dynamics improve.

For FY25, the business mix was approximately two-thirds latex and one-third rubber. The nitrile latex segment contributed about 14-15% to total revenue, with an expected revenue range of ₹400-450 crores for FY25. The NBR segment operated at nearly 100% capacity utilization. While the paper and carpet segments faced challenges, the construction segment remained steady. The company is bullish on SB Latex, where it holds a strong market share and sees good growth in exports.

Apcotex is planning capacity expansions in both the rubber and latex segments. For NBR, a decision is pending the final conclusions of an anti-dumping investigation. The company aims for a return on capital of at least 25% for any new investments. While current capacity is sufficient for the near term, management anticipates needing more capacity within the next year and a half, especially in the latex business.

As of March 31, 2025, total borrowings stood at ₹185 crores, comprising both term loans (approximately ₹125 crores for past projects) and working capital loans (approximately ₹80 crores). The company has already repaid one year of its term loan and expects to close the remaining in the next three years. With ₹100 crores in cash, management considers the balance sheet healthy and well-managed, with net debt to EBITDA at 0.68.

The company is navigating challenges from external factors, including the sharp fall in crude oil prices, which is expected to impact Q1 FY26 margins due to inventory adjustments. Geopolitical uncertainties, particularly US tariffs on Chinese gloves, are creating market uncertainty^🌐 for Apcotex's customers who export to the US. While no direct impact has been felt yet, the situation is being closely monitored for potential indirect effects on business.

Apcotex has invested ₹3.27 crores in a hybrid power project for its Gujarat plant, which includes wind power generation. This initiative is part of a Gujarat Government scheme to promote renewable energy, aiming to transition 60-70% of the plant's power consumption to renewable sources. The project is expected to yield significant savings and reduce greenhouse gas emissions, aligning with ESG objectives.