ICICI Direct's research report on Apcotex Industries
Apcotex reported a dismal topline performance with revenue falling 2% YoY to Rs 146.7 crore, impacted by lower volume growth due to capacity constraints at Valia plant and poor realisation on the back of a fall in key raw material prices. Lower raw material prices improved gross margins to 33.4% (up 340 bps YoY) which in turn led to EBITDA margin expansion by 80 bps YoY at 12.3%. This led EBITDA growth of 5.5% YoY to Rs 18.1 crore. Lower other income was on account of mark to market losses on equity investments. However, the same was negated by lower tax rate (28.1% vs. 31.5% in Q1FY19) to some extent during the quarter. PAT remained almost flat at Rs 11.4 crore against Rs 11.2 crore in Q1FY19.
Outlook
Hence, we cut our P/E multiple to 16x (implied EV/EBITDA ~9.6x) from 18x on FY21E and arrive at a target price of Rs 205, with a potential upside of 8%. We maintain HOLD rating on the stock.
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