Apcotex Industri

Apcotex Industries reported a robust Q4 FY26, with operating revenue growing 14% year-on-year to INR 398 crores, driven by higher volumes and pricing discipline. Operating EBITDA surged 42% to INR 55 crores, expanding margins to 13.76%. Profit after tax (PAT) saw an impressive 107% increase to INR 35 crores, achieving a PAT margin of 8.73%. For the full fiscal year 2026, the company achieved record sales volumes, up 14% year-on-year, and highest-ever export volumes, also growing 14%, contributing to an operating revenue of INR 1,442 crores and PAT of INR 101 crores.

The company recognized several one-time^📎 accounting adjustments in Q4 FY26. Employee benefit expenses included approximately INR 14 crores for a new long-term incentive plan, pending litigations, and gratuity policy changes. An impairment loss of about INR 4 crores was recorded for a turbine at the Valia facility, and a revision in the useful life of certain plant and machinery led to an additional INR 2 crore in depreciation. Management clarified these were mostly one-off^📎 in nature and not expected to recur, aiming to clean up pending issues by year-end.

The Nitrile Latex segment operated at almost full 100% capacity utilization in Q4 FY26 and is expected to maintain this level going forward^⏳. Margin expansion in this segment contributed significantly to the strong quarter, partly due to the geopolitical situation limiting competitors' supply. While the segment structurally remains challenging, management expects margins to improve over the next four quarters, with the segment contributing an estimated 15-20% of the total top line. The company plans to continue running at full capacity utilization.

The ongoing West Asia crisis and the closure of the Strait of Hormuz created significant volatility in raw material prices and supply chains. Apcotex proactively secured key raw materials, enabling uninterrupted operations in March and April, despite challenges in sourcing from the Middle East. While some raw materials are now coming from China at higher prices, the company has managed to avoid production shutdowns. This situation, however, poses an ongoing concern for costs and competitiveness, especially in export markets.

Apcotex maintained a strong net cash positive position, with cash and investments exceeding borrowings by approximately INR 70 crores, and a net debt-to-equity ratio of 0.08. The company announced a final dividend of Rs. 5.50 per share, bringing the total FY26 dividend to Rs. 8 per share. Strategic CapEx projects are underway, including plans to almost double NBR capacity by next year and build new synthetic latex capacity for FY28. Additionally, INR 20-25 crores is allocated for a new R&D center in FY27 to drive value-added product development and new molecule research.

The export business, particularly to the Middle East, UAE, Kuwait, Saudi, Egypt, and Turkey, faced challenges due to increased freight rates and competitive pressure from Chinese latex in markets like Egypt and Turkey. Management acknowledged that while some benefits from the war situation were temporary, the company is investing in R&D to develop specialized products and new molecules. This includes building a new R&D center to move up the specialty value chain and reduce reliance on commoditized products, aiming for long-term growth and differentiation.