Apcotex concall notes from the Audio Recording (Q4FY24):
- In FY25: expect mid-Tteen volume growth ex-Nitrile latex . If the Nitrile latex cycle improves, 30~35% volume growth is possible. Ongoing OPM of 10% among lowest and sustainable, endeavor to improve.Margins Ex-Nitrile Latex: 2~3% higher than overall company. Net Debt: 70Cr. Overall volume growth: 28% annual | 34% Q4FY24.Capex: 3 types - Cost saving (~10 to 15 Cr.), expansion and maintenance (~20 Cr. annual)
- Nitrile latex: Expected 100% utilization in the recent months, but achieved ~45%. Glove industry yet to improve. Overcapacity (~20% excess capacity | Growth of the industry in double digit) and Inventory (expect to end soon) headwinds remain. China has put up a lot of integrated capacity in the last 1 year. Nitrile latex demand not an issue, but margins remain subdued. Focus to increase customer breadth and reduce cost. If contribution margins support us in FY25, expect to utilize 100% capacity.Mkt. has been down for 12~18 months. Nitrile latex has been a drag on EBITDA due to ongoing breakeven operations. Margins at historical low, way below pre-Covid level. If the market does not improve, option to partially repurpose (decision in 1~2 Qtrs. | timeline 6~8 months | cost ~2million) the capacity to other latex products.Anti-dumping intervention by the government remains sub-judice. Revenue contribution less than 10% for the FY.
- Nitrile Butadiene Rubber: After normalization of sea freights, significant imports to India and margins have been challenging compared to the last 2 years. China demand remains subdued. 1~2 Qtr. required to announce a decision on the capex.
- Apcobuild (B2C business) annual revenue growth 18~20% in FY24. Overall contribution to revenue is still in single digit.
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