Capitaline

Analyst Meet / AGM 09-Nov-17

Conference Call

Apcotex Industries

Confident of improving Ebitda margin for next 6-8 quarters

Apcotex Industries held a conference call to discuss the results for the quarter ended September 2017 and way forward. Mr. Abhiraj Choksey- Managing Director and Mr. Anand V. Kumashi- Company Secretary of the company addressed the call
Highlights of the Concall

Revenues for the quarter increased 39.8% YoY and 7.4% QoQ to Rs 129 crore in Q2FY18. EBITDA increased 230% YoY and 77% QoQ to Rs 15.2 crore. Ebitda margin improved 680 bps YOY and 460 bps QoQ to 11.8%. PAT was up 81% YoY and 64% QoQ to Rs 8.5 crore.

For H1FY18 revenues were up 25.8% to Rs 249.1 crore. EBITDA increased 53.9% to Rs 23.7 crore. Ebitda margin improved 170 bps to 9.5%. PAT was up 5.4% YoY to Rs 13.7 crore.

The company's Taloja plant labour issues have been resolved and the plant is currently running smoothly. The unionised workmen at Taloja Plant were on strike for 52 days in Q4 of FY 2016-17 from January 9, 2017 to March 2, 2017. Sales of the company were affected till April 2017 as some of its customers imported or made other arrangements because of strike.

One of its big customer whose volumes were impacted by strike and were uncertain till last quarter did volumes of around 40-45% of regular volumes

YoY export growth was around 95-100%. Although the company exports its products to large number of company's major chunk is to Middle East and South East Asia countries

The company expects to regain its EBITDA margin of 13-14% in next 2-3 years

Good growth seen across all industries in the domestic market where the company supplies its product.

The company achieved highest volumes and margins for Nitrile Rubber on account of shortage of imports and technical approvals achieved in the last few quarters.

Margins of the company improved led by low cost inventory, good export growth, better volumes and efficiency in buying raw materials. The company is confident of improving it's Ebitda margin for next 6-8 quarters.

Export margins are similar to domestic margins

Capacity utilization at Taloja plant in Maharashtra was 80-85% and at Valia plant in Gujarat was 90%.

First 2 phases of investments at Valia plant totaling to about Rs. 60 crore has started.

The first phase of capex amounting to approximately Rs.30 crore is to reduce the operating cost and improve the quality at its Valia plant. Most of these projects will be completed by March 2018, but main project which is power plant, which will constitute about 70% of the total capex plan, will be completed by December 2018.

Phase II of capacity expansion will be debottlenecking the capacity at Valia plant (NBR and allied products) and increasing it by 35-40% from current 16000 metric tonne.

In the long-term the company has plans to double its NBR capacity and also increase the latex capacity but investment and timelines are still being worked out.

The company had earlier guided revenue of Rs 550-600 crore for FY18 which was inclusive of excise duty. The company is confident of meeting its revenue guidance.

The company does not see any negatives of GST.

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