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Apcotex Industries is an unknown and highly under researched company. The co is the top producer of Synthetic Latex and only producer of NBR (product under Synthetic Rubber division) in India. The company is owned by Atul Choksey – MD Of Asian Paints (1984-1997)
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and run by his son Abhiraj Choksey (heading for last 15 years). Management pedigree is top notch and know how to scale the business.
In its latex division, Apcotex produces construction chemicals for Pidilite (Dr Fixit), Sika (Top brand in Europe) and Fosroc.
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In its latex division, Apcotex produces construction chemicals for Pidilite (Dr Fixit), Sika (Top brand in Europe) and Fosroc.
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It has also started developing its own brand of construction chemicals by the name of Apcobuild, although its too small yet but definitely something to keep a watch on.
The moat of the business lies in its research and development on process efficiency and product development 3/n
The moat of the business lies in its research and development on process efficiency and product development 3/n
which helps the company shield itself from volatility in rwa material prices (Butadiene, Styrene & Acrylonitrile) which are mostly imported. The company is also the only Indian producer of Nitrile Latex (used to produce Nitrile Gloves and demand for which is through the roof 4/n
post COVID) and one of 5-6 in the world and supplies to worlds largest glove makers including Top Gloves. Current global demand for nitrile gloves stands at 2.5 times supply. 5/n
While the company organically grew the latex division the Synthetic Rubber division (NBR) was a unit the company bought from Omnova Solutions in 2016.
Abhiraj seems to be excellent at capital allocation as the co could buy a plant worth 250cr (replacement value) for 30cr
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Abhiraj seems to be excellent at capital allocation as the co could buy a plant worth 250cr (replacement value) for 30cr
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as the plant was under-utilized and as part of an acquisition deal, Omnova had to let go off the plant. The plant is located on a land measuring 115 acres of which only 15% is currently being used.
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Co has announced a 100+cr capex for Nitrile Latex at the same plant which will kick in operating efficiencies. Apcotex had its tough time in 2019 due to the slowdown in auto sector which caused an inverted structure where in raw material were expensive then finished goods,
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COVID crash has reset the equation and the significant demand from auto and agri has only made things better.
Company’s raw material are Butadiene, Styrene and Acrylonitrile (around 90-95% of raw material) and its best to use Bhansali Engineering Polymers Ltd as a cross read 9/n
Company’s raw material are Butadiene, Styrene and Acrylonitrile (around 90-95% of raw material) and its best to use Bhansali Engineering Polymers Ltd as a cross read 9/n
as the same raw material form 80-90% for BEPL. Prices for both Synthetic Latex and Synthetic rubber have moved up significantly while raw materials haven’t moved in the same proportion.
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Prices are back to levels seen in 2018, while raw material hasn’t moved up tandem – signaling significant expansion of margin. The same can we witnessed from the results of Bhansali. Following chart portrays the price of NBR for reference.
