Friday, May 7, 2021

Apcotex Industries Ltd (523694)- Soaring Rubber prices

Apcotex Industries Ltd (523694) closes   at ₹ 270.80 with  a  Gain  of   +12.60 %   on    06-May-2021  with formation of  a  Long  Green  Candle    on Daily  Price Chart.

About the Company : Apcotex Industries Limited is engaged in the business of producing synthetic emulsion polymers. The Company's product range includes vinyl pyridine latex, carboxylated and non-carboxylated styrene butadiene latexes, acrylic latexes, nitrile latex and synthetic rubber. The Company's range of latexes is used for Tire cord dipping, paper/board coating, carpet backing, construction (concrete modification and water proofing), paints, textile finishing and automotive components. Its high styrene synthetic rubber is used in various applications, such as footwear, automotive components, v-belts, conveyer belts and hoses. Its synthetic latex products for paper include Apcotex PC 200, Apcotex PT 600 and Apcotex PT 750. Its synthetic latex products for construction include Apcotex PC 400, Apcotex TSN100, Apcotex TSN400 and Apcotex TSN543. Its synthetic latex products for textile include Apcotex TX 400, Apcotex TX 500 and Apcotex TX 600. Its manufacturing plants are located at Taloja, Mumbai.

Sector Update : Positive

Strength :  Natural rubber prices have soared 75 per cent from the lows after the pandemic hit demand. It is believed that with rising global demand and limited supplies, prices could test 2010-11 highs of $5 per kg over the next five years. Rubber prices are trading at Rs 168-Rs 170 per kg or $2.3 per kg.

Financials : Apcotex Industries Limited  has posted Net Sales / Revenue   of 541.00 Cr & Net Profit of  44.00Cr in FY2021 and expected to post Net Sales / Revenue   of 740.70 Cr & Net Profit  of  54.80Cr in FY2022.

Valuations  : The Company is now Trading at X 2.38 of its  valuations ( FY2020-21 earnings considered here) with ~128 % premium   and at X1.55 of its FY 2022, which is now almost  ~55%  premium   to its value .

Margin of Safety (1Yr Bond Yield: Value>1 ) is now  0.40  which  makes is attractive after a ~60% fall in market price. The  Equity Value Per Share ( Enterprise Value Method ) is  268.

If We factor its earnings/valuations, its Price arrives at 682.50 with consideration FY2022 earnings.

Disclaimer : We are / may going to take exposure shortly.

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