Q1FY24 concall notes:
- Sales declined 9% YoY to 278 Cr but increased 8% QoQ. EBITDA declined 40% YoY with margins at 9.2%
- Had highest ever quarterly volumes and export volumes witnessed 22% QoQ and 110% YoY growth led by nitrile latex carpet and construction. But RM prices fell sharply and hence sales dropped despite strong volume growth
- EBITDA margins were affected due to lower margins in NBR and paper binders because of pressure on demand, inventory losses
- Inventory losses to continue in Q2, lost 3% EBITDA in Q1
- PAT margins impacted by higher dep and interest costs after Capex commissioning
- Capex updates
- Company wants to increase exports and for nitrile latex they sent some samples out to customers to get approvals done which takes 3-6 months. But since they have installed new technology for nitrile latex, they need these approvals
- While for Taloja plant products like styrene butadiene latex, styrene acrylic the customers accepted product immediately because these are established products on same tech
- Both plants around 25-30% utilisation, hope to reach 70% by Q4
- Planning for capex for NBR after this
- Competitive edge vis a vis players in Europe
- Since EU has higher energy costs, service levels are lower Apcotex has some advantage
- Sometimes product quality/performance is better from Apcotex
- Apco-build
- Building distribution network for the product and now Apcotex is present in 4-5 states
- Since this is B2C business, it takes time to build
- Since Apcotex has strengths on polymer side and are backward integrated, so this is an area of strength for them
- This business may get scaled to 300–400 Cr in 5-10 years
- Export mix to go up to 40%+ in 4-5 years as nitrile latex will be majorly exported
- Nitrile latex situation
- Top Glove and Synthomer closing factories
- Margins below pre-COVID level and 1/10th of COVID level
- But Apcotex has only 50K tons capacity which is small, so they should be able to scale up as and when demand comes back
- Market is also moving away from natural latex gloves to nitrile latex gloves
- NBR situation
- This product is easy to transport and easy to store, hence some dumping from Korea is impacting
- There is inventory destocking of NBR as well, so overall demand and prices are low here as well
- Guidance
- Looking at 600-700 Cr revenue from capex done recently
- Going forward growth will be driven more by latex products and some by NBR
- Expect 4-5 times asset turns on the existing mount of assets when things turn back
| Subscribe To Our Free Newsletter |
