APCOTEX INDUSTRIES LIMITED
Know the Company
Apcotex Industries Ltd (Apcotex) is the pioneer in producing Vinyl Pyridine latex and Carboxylated Styrene Butadiene latex in India. It is a leading domestic company specializing in the manufacturing of Synthetic Latex and Synthetic Rubbers. Started as a division of Asian Paints Ltd in 1980, it was subsequently spun off as an independent entity in 1991 under the name of Apcotex Lattices Ltd. In 2005, the company was renamed as Apcotex Industries Ltd.
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Apcotex has emerged as a prominent manufacturer and supplier of synthetic latex emulsions, binders, and specialty chemicals, serving diverse industries including tyre, paper, textiles, adhesives, and coatings, etc. The company’s extensive product portfolio also includes a wide range of latex based products such as carpet backing, textiles, hoses, non-woven fabrics, and construction chemicals etc.
Apcotex has two manufacturing facilities. The first one is in Taloja, Maharashtra, where Synthetic Latex and High Styrene Rubber (HSR) are produced. The second plant is situated in Valia, Gujarat, specializing in the production of Nitrile Butadiene Rubber (NBR) and High Styrene Rubber.
Apcotex exports its products to over 45 countries including the Indian Subcontinent, Southeast Asia, the Middle East, Turkey, Japan, Africa, Europe, the USA, and Latin America. The company has marquee clients in the Synthetic Latex segment, including ITC, Asian Paints, Ultratech Cement, Welspun, JK Paper, Pidilite Industries, MRF, SRF, Century Enka, and Mac, among others. In the Synthetic Rubber segment, the company’s clients include Paragon Footwear, Jayshree Polymers, Parker Hannifin, Gates India, Supreme Industries, etc.
Products Mix
1.Synthetic Latex
Apcotex’s synthetic latexes include Styrene Butadiene latex, VP latex, Styrene Acrylic latex, and Nitrile latex. The performance of each synthetic latex differs across industries based on their characteristics, applications, and polymer types. In the construction segment, synthetic latexes are used for their excellent water impermeability and for enhancing bonding between new and old concrete. In the tire segment, high-performance latex is utilized for dipping tire cords. In the specialty segment, it finds applications in a range of specialty products such as gaskets, non-woven fabrics, abrasive paper, textile finishing, cork sheets, etc.
2.Synthetic Rubber
The synthetic rubbers are produced artificially through chemical processes using various raw materials such as petroleum-based hydrocarbons or other organic compounds. Apcotex produces various kinds of Synthetic rubber such as cold Nitrile Rubber (NBR) to hot NBR.
Nitrile Rubber is a specialized type of synthetic rubber known for its exceptional resistance to oil, fuels, and various chemicals. It finds extensive use in the automotive industry and various industrial applications for manufacturing fuel and oil handling hoses, seals, and a variety of rubber products where conventional rubbers would not suffice.
NBR Polyblend is a cost-effective medium of ACN blend, used for general-purpose automotive and industrial molded and extruded products as well as footwear industries. High Styrene Rubber offers various degrees of hardness and excellent processability for manufacturing Hawaii slippers and micro-cellular sheets. At the same time, NBR Powder is used in joining sheets, PVC modification, brake pads, friction materials, adhesives, and other rubber applications.
3. ApcoBuild Smarter
ApcoBuild is the brand name of Apcotex’s B2C Construction Chemical business. Under this brand, Apcotex provides best-in-class waterproofing and tiling solutions through a wide range of products designed for applications in waterproofing, repairing, and rehabilitating existing structures.
Additionally, it offers a variety of other product solutions for exterior coatings and concrete admixtures to address various construction and civil engineering-related challenges.
Strengths
Established in 1980 as a division of India’s largest paint manufacturers – Asian Paints (India), Apcotex benefits from its robust parentage and management support.
Apcotex maintains strong presence in both domestic and international markets, underpinned by its unwavering commitment to quality, innovation, and customer satisfaction. Over the past few decades, Apcotex has experienced exponential growth in revenue, expanded its product portfolio, and broadened its sales network into new geographic regions. With state-of-the-art manufacturing facilities and a dedicated research and development team, Apcotex continually endeavours to enhance its product offerings and develop customized solutions to address the evolving needs of its customers. Apcotex is a well-diversified company in all aspects, including end applications and geographical reach, with over 20% of its sales originating from exports.
Apcotex boasts of large manufacturing capacities across the products. The company’s Taloja synthetic latex plant currently has a swing capacity of 100,000 MT p.a. (wet) and 10,000 MT p.a. (dry) for HSR. At the Valia rubber plant, NBR, NVC and powder production have increased to 21,000 MT p.a. from 16,000 MT in 2016. The company’s Carboxylated Nitrile Latex production for gloves application stands at 50,000 MT p.a. (wet), with plans for expansion to 80,000 MT p.a. (wet) in the next phase. Additionally, Apcotex is the sole manufacturer of NBR, HSR, and X-NBR latexes in India. The company has commissioned new latex capacities at Taloja and Valia in the past financial year. Additionally, it continues to explore opportunities in new adjacent products as well as avenues for inorganic growth. Besides the existing product portfolio, the company boasts of a robust next-generation product pipeline poised to drive further growth.
The company’s products depend on steady-growth industries such as paper, construction, carpet, non-wovens, textile finishing and footwear, etc, providing a solid foundation for sustainable growth. Additionally, its industrial-purpose products such as tires, v-belts, conveyor belts, hoses, and more are also in high demand.
Apcotex’s innovation capabilities also superb. The Nitrile latex for gloves is a new emulsion polymer developed internally by the Company through its R&D efforts. It was successfully scaled up in FY 2020-21 and is presently exclusively manufactured only by the company.
Outlook
Apcotex has emerged as a leader in specialty rubber products, particularly in Nitrile Butadiene Rubber and High Styrene Rubber in India, supported by increasing investments in R&D and a robust manufacturing capability. The company’s growth primarily depends on the overall economic growth of the country since its products are closely linked to consumer demand. The outlook for the Indian economy remains positive, and the government’s substantial investments are expected to propel the economy towards sustainable growth, which all are source of strong hope for the company.
The synthetic rubber market is primarily propelled by the Tyre segment, as it stands as the largest end-use segment, followed by automotive applications. Certain synthetic rubbers, notable for their considerable strength, are substituting metal components in vehicles. This substitution reduces vehicle weight, thereby enhancing fuel efficiency without sacrificing performance. Similarly, synthetic latexes such as Styrene-Butadiene latex, Styrene Acrylic, Pure Acrylic, Vinyl Acetate, Nitrile Latex, etc., find major applications in numerous consumer products such as paper and paperboard coating, carpet backing, construction, gloves, textiles, paints, adhesives, etc. In India, the growth in demand for these products are expected to be exceptionally robust due to the increasing purchasing power, population growth and changing consumer trends.
Demand for synthetic rubber stems from various industries including the manufacturing of tires, footwear, sports goods, and other auto components also remains strong. The Asia Pacific region leads global synthetic rubber production, with the automobile sector driving growth. Given India’s increasing population, substantial manufacturing base in the automobile industry, and access to competitive labour, the country gives excellent growth opportunities for synthetic rubber products in the near future.
Financial Performance
For Q3FY24, Apcotex reported total revenue of Rs 257 crore compared to Rs 234 crore in the same quarter of the previous financial year. Expenses for the period amounted to Rs 232 crore, up from Rs 203 crore. The consolidated net profit for the quarter stood at Rs 11 crores, registering a decrease of 45% from Rs 20 Crores in the corresponding quarter of the previous year.
Risks
The company primarily relies on petrochemical-based products such as Butadiene, Acrylonitrile and Styrene as its primary raw materials. Consequently, fluctuations in crude oil prices in international markets, as well as exchange rate fluctuations are cause of concerns for the company.
Apcotex also faces competition risks due to the current excess capacity and inventory of Nitrile Latex globally, as well as excess capacity of Styrene Butadiene Latex in the domestic market. These conditions may impact sales volume and margins in the short term.
Sector: Industrials
Market Price: Rs. 442 as on today
FV: Rs 2/-
Stock Name: Apcotex Industries Ltd
BSE Code: 523694, NSE Code: APCOTEXIND
Market Cap.: Rs 2272 Cr
Book Value: Rs. 95.6
Segment: Synthetic Rubber
Incorporation: 1980
Headquarters: Maharashtra, India
