Apcotex H1 EBITDA rose 121% despite Q2 inventory losses

Apcotex Industries Limited recorded its strongest half-year in H1 FY27, with operating EBITDA rising 121% year on year to Rs 175 crore, despite management estimating that inventory losses reduced Q2 margins by about 1.5% as raw-material prices fell in July and August before recovering.

How did Apcotex perform in H1 FY27?

Apcotex reported record half-year EBITDA, profit before tax and profit after tax in H1 FY27. Operating revenue rose 44% year on year to Rs 1,025 crore, while EBITDA increased 121% to Rs 175 crore. EBITDA margin expanded by 599 basis points, or 5.99 percentage points, to 17.12% for the six months ended September 30, 2026.

Profit after tax, or PAT, rose 156% year on year to Rs 114 crore in H1 FY27, and PAT margin increased to 11.11% from 6.25% a year earlier. Management attributed the outcome to volume growth, improved margins and its handling of market conditions during the period discussed on the October 29, 2026 earnings call.

The H1 result included a more moderate second quarter. Q2 operating revenue was Rs 499 crore, up 48% year on year, while EBITDA rose 44% to Rs 58 crore. Revenue growth in Q2 was therefore above the 44% H1 rate, but EBITDA growth was well below the first-half 121% increase, reflecting a higher contribution from the earlier quarter.

Why did Apcotex’s Q2 FY27 margin decline?

Apcotex’s Q2 EBITDA margin declined to 11.69% from 12.06% in the corresponding prior-year quarter because of inventory losses, high raw-material prices, freight costs and pricing actions. Management estimated that inventory losses alone accounted for close to 1.5% in Q2 after prices declined during the first two months of the quarter.

Management said raw-material prices rose again in October and November as oil prices increased, but Q3 was only one month old when the call took place. Apcotex had instituted some price increases, and management said part of the Q2 pressure could be recovered, while providing no formal margin forecast for the rest of FY27.

Q2 PAT rose 38% year on year to Rs 35 crore and PAT margin was 6.98%. The gap between the Q2 EBITDA margin of 11.69% and the H1 margin of 17.12% indicates that the inventory and cost effects were concentrated in the second quarter rather than representative of the entire half year.

Management said it would accept a lower percentage EBITDA margin if needed to protect volumes amid high raw-material costs. It also monitors EBITDA per tonne and return on capital employed, or ROCE, but did not disclose either measure or segment-level volume data for Q2 or H1 FY27.

What supported Apcotex’s Q2 sales volumes and exports?

Apcotex increased overall sales volumes by 7% year on year in Q2 FY27, while export volumes recovered from their decline in Q1 FY27. Management said vessel availability improved somewhat from Q1 on routes from India’s west coast to Saudi Arabia and for shipments into Fujairah in the United Arab Emirates, although the Middle East and North Africa, or MENA, region remained constrained.

The company also pursued orders more aggressively in other export markets. Management said this supported volumes but was one reason gross margins were lower. Q2 revenue rose 48% to Rs 499 crore despite the 7% volume increase, reflecting higher selling prices alongside elevated input costs.

Within synthetic latex, management said construction performed particularly well over the preceding six to 12 months, including repairs, waterproofing and oil-drilling applications. Paper also performed well, textiles were described as decent and tyres as okay, while carpets lagged because of exposure to MENA and western markets.

Management said carpet demand had been affected by US tariffs, war-related disruption and high ocean freight rates, but looked somewhat better in Q2 than Q1. For the wider business, management expects average volume growth of about 10% annually over the next three to five years, with construction expected to grow faster than carpets.

What is Apcotex doing with its NBR and SBR expansion?

Apcotex expects its solid nitrile butadiene rubber, or NBR, project to start around April 2027, with utilisation gradually ramping over about two to three years. Management said its current focus is the NBR project and a styrene butadiene rubber, or SBR, latex plant at Valia rather than an immediate further investment in nitrile latex.

The SBR latex facility was expected to begin operations around the second quarter of the next financial year, based on the October 29 discussion. Management said NBR serves automotive, industrial and liquefied petroleum gas hose applications, and it expects long-term demand growth in India without providing a revenue or capacity target.

Management cited Rs 210 crore of Valia projects in its prepared remarks. In response to a question, the chief financial officer cited Rs 220 crore of capital expenditure, with about Rs 65 crore spent and Rs 155 crore remaining to be paid through project completion and sometime thereafter. Apcotex said it was net cash positive as of September 30, 2026, despite elevated working capital from higher inventory values and receivables.

What is Apcotex’s outlook for nitrile latex?

Apcotex is operating its nitrile latex business at close to full capacity but has deferred a new expansion decision until it sees several more quarters of sustained margins. Management said Q2 profitability normalised after an unusually favourable Q1 FY27, but remained better than the preceding three years.

Management said some smaller or older nitrile latex capacities in Indonesia and Malaysia had shut, but overcapacity created during the COVID period remains in the market. The board had not approved a further nitrile latex expansion at its meeting held a day before the October 29 call, and management said additional reactors would be required if it proceeds.

Apcotex is developing products for battery binders, oil drilling, textiles and paper, including products using more bio-based raw materials alongside petrochemicals. Management characterised battery binders as a potentially niche segment and said petrochemical inputs could not be fully replaced.

Conclusion

Apcotex’s H1 FY27 performance combined Rs 175 crore of EBITDA and Rs 114 crore of PAT with revenue of Rs 1,025 crore. The 121% EBITDA increase outpaced the 44% revenue rise, while Q2 showed the cost trade-off: volumes grew 7% and exports improved, but inventory losses of about 1.5%, freight costs and raw-material volatility reduced quarterly EBITDA margin to 11.69%.

The next developments to watch are whether October and November price increases offset Q2 cost pressure, the targeted April 2027 NBR start and the expected second-quarter start in the next financial year for the Valia SBR latex facility. Management also plans to assess nitrile latex expansion after observing a couple more quarters of margins, while Rs 155 crore of project outflow remains under the chief financial officer’s Rs 220 crore estimate.