Apcotex Industries Ltd (APCOTEXIND) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to the Q2, H1 FY '27 earnings conference call of Apcotex Industries Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star followed by zero on your touch-tone phone. Please note that this conference is being recorded. At this time, I would like to hand over the conference to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you.
Purvangi Jain (Valorem Advisors): Thank you. Good afternoon, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Apcotex Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the second quarter and first half of the financial year 2027. Before we begin, a quick cautionary statement. Some of the statements made in today's concall may be forward-looking in nature. Such forward-looking statements are subject to risk and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now, I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Abhiraj Choksey, Vice Chairman and Managing Director; and Mr. Vivek Thakur, Chief Financial Officer. Without any delay, I would now like to hand the call over to Mr. Vivek Thakur for his opening remarks. Thank you, and over to you, sir.
Vivek Thakur (Apcotex Industries Ltd): Thank you, Purvangi. Good afternoon, everyone. It is a pleasure to welcome you all to the earnings conference call for the second quarter and first half of financial year 2027. I hope you had an opportunity to review the financial statements and earnings presentation, which have been circulated and uploaded on our website and the Stock Exchange. Let me provide you with a brief overview of the financial and operational highlights for the period under review. For the second quarter of financial year 2027, operating revenue stood at INR 499 crores. This registered a growth of 48% year-on-year. This was supported by a 7% increase in sales volumes. Export volumes also witnessed a recovery during the quarter, reversing the decline seen in quarter 1 of FY '27. Operating EBITDA stood at INR 58 crore, registering a growth of 44% year-on-year. This was driven by modest volume growth and enhanced contribution margin following strategic price adjustments. EBITDA margins stood at 11.69% compared to 12.06% in the corresponding quarter of the previous year. Profit after tax for the quarter stood at INR 35 crore. This reflected a growth of 38% year-on-year with PAT margins of 6.98%. Despite the moderation in profitability compared to previous quarter, our overall business performance has remained strong. It was supported by sustained volume growth and strategic pricing actions. For the first half of financial year 2027, operating revenue stood at INR 1,025 crores, registering a growth of 44% year-on-year. Operating EBITDA stood at INR 175 crore, registering a significant volume growth registering a significant growth of 121% year-on-year
Vivek Thakur (Apcotex Industries Ltd): and our ability to effectively navigate market conditions. During this quarter, other expenses have risen a little bit. This was driven by higher freight costs from geopolitical supply chain disruptions. While these economic, macroeconomic pressures persist, we have successfully offset a significant portion by passing these costs through to the market. Alongside our financial performance, we continued to make progress on our strategic expansion plans, with the execution of 210 crore Capex projects at our Valia facility have remained largely on track. During this quarter, working capital requirements continue to remain elevated due to higher input costs. This resulted in increased inventory values, as well as receivables. We also continue to maintain a net cash positive position as of 30th September 2026, reflecting our financial strength. Overall, our performance during the period reflects the strength of our operations and our continued focus on profitable growth. With this, now I open the floor for question and answer session. Thank you.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. In order to ensure that management is able to answer queries from all participants in the queue, please restrict to two questions at a time. We will wait for a moment while the question queue assembles. We will take our first question from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Aditya Khetan (SMIFS Institutional Equities): Thank you, sir, for the opportunity. Sir, just a couple of questions. Sir, when we look in this quarter, obviously, onto the gross margin side, we are witnessing a pain. barring last quarter of exceptional gains, even like we are standing at some four-quarter low in terms of gross. What changed like in terms of cost? Was it because of higher cost we had build that had and the prices subsequently went down. We had to book some inventory losses. And sir, secondly, export volume, like so you mentioned that has been recovered in this quarter. Because sir, so barring what we understand that the geopolitical tensions are still there and even freight and container availability still remains an issue. So, what has led to this jump in export volumes? Was it the customer offtake was quite strong in export market and we have got the containers, or what has led to this jump in volumes in exports?
Abhiraj Choksey (Apcotex Industries Ltd): Thanks thanks, Aditya. So, I'll take it up. This is Abhiraj Choksey. So, one is yes, certainly you know gross margins have been lower. As you know, in our business when prices are very high, of course, Q1 was an exceptional quarter. As I mentioned in the Q1 meeting as well, a couple of our competitors were shut, thanks to our better risk management. We were able to keep our plants running, so the margins that we were able to get in spite of very high raw material prices were were very healthy. In this case, you know, yes a combination of reasons. One is of course just the prices being very high. So as a percentage, it seems that gross margins are low. There were inventory losses as well this quarter because the first two months of the quarter the prices were coming down, and then of course they went back up again. But net-net, for this quarter we probably have, you know, close to 1.5% of inventory losses. So that would have, perhaps the gross margins of the EBITDA margins may have been better by about that much. Another big reason is, of course, as I said, we were able to get some of the exports back. Of course, the MENA region remains tight. But compared to Q1, I would say the availability of ships and all has actually improved a little bit. Not to the UAE and, but to Saudi for example, from the West Coast, we're able to do it. But specifically not to the UAE, but UAE also, we are you know, being able to get some ships going into Fujairah. So certainly things have improved somewhat compared to Q1, so that's been the reason of exports. We've also got orders from other markets that were you know, I think we've been more aggressive, and maybe that's one of the reasons to have gross margins a little lower is we've also been more aggressive. But we're quite happy with the results because you know the two other parameters, which is EBITDA per ton, which I know we don't talk about, but EBITDA per ton is much better in Q2 of this year compared to the corresponding period of the last year. Even though EBITDA margins as a percentage may be a little lower. And the second thing is ROCE, sorry,
Abhiraj Choksey (Apcotex Industries Ltd): capital remains very healthy in spite of these lower gross margins and slightly lower EBITDA margins. So that's what we've been focusing on and ensuring that our volumes are protected and and some growth at least happens in you know in this difficult time. I hope that answered your question.
Aditya Khetan (SMIFS Institutional Equities): Sir, my next question is if you go on to the Nitrile Latex. So any sense like where are we standing in terms of a cycle? In terms of prices like are export prices firming up? And globally, what is the situation? Has been has been overcapacity coming down or still maintaining at those levels? Because we have been hearing some capacities in Indo- Indonesia and Malaysia shutting down. So, has has that been consistent or or or new capacities are also building up? Any sense onto the Nitrile Latex side, and on to the volume side where are we standing today?
Abhiraj Choksey (Apcotex Industries Ltd): Yeah. So, first of all we are running at close to full capacity in Nitrile Latex number one. As I mentioned last quarter also, last quarter was a blip. We had really good margins on Nitrile Latex in Q1. When I'm saying last quarter, Q1. Q2 normalized a bit, but it's definitely much better than it has been in the last 3 years, let me put it that way. I know somebody in the call will at some point ask me, what about the investment decision of Nitrile Latex? And I think we're still waiting. We We had a board meeting yesterday and we have not taken a call on the Nitrile Latex further expansion yet, because, you know, Q1 as I mentioned earlier was a little bit of a blip. So, if you remove that, we still want to see a couple of more quarters of consistently decent margin, and then we will take a call on on how and what to invest in. As I said, we have most of it ready. We'll have to kind of just add reactors. So, at the current moment we are going and focusing on the projects for the solid NBR which will come on stream early next year early in the next financial year, and also our other synthetic latex, SBR Latex plant in Valia, which will come on stream perhaps in the second quarter of next year, it looks like right now. So, our focus is that. I think in the next couple of quarters we'll probably decide on the Nitrile Latex expansion. But we're waiting to see how the margins are the next few months. It's definitely improved. Capacity utilization has improved, but I mean there is an overcapacity, right? What was created in COVID, we are still living with that. You're right. Some of the some of the smaller capacities have shut down, but or older capacities have shut down, but it's still an overcapacity in the market today.
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