India Equity Value investor, Trivikram Consultants

Prashant Vaishampayan

India Equity Value investor

Picking Long Term Multi-bagger stocks

Trivikram Consultants

Trivikram Consultants is an equity research service founded by Prashant Vaishampayan, a registered Research Analyst with SEBI in India. Prashant has done equity research since 1992.  He worked with Jardine Fleming, SG Securities, UBS and Kotak Securities. Since 2010, he is managing his portfolio and doing outsourced equity research for institutional clients. A team of six professionals helps him in equity research. We focus on pharma, agro-chemicals, auto and auto components, banks and financial services, specialty chemicals and niche manufacturing sectors.   

Equity Bottom-Up

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<a href="https://www.smartkarma.com/entities/13310" target="_blank" data-smartkarma-citation="entities:13310:1">Apcotex Industries (APCO IN)</a>   reported a strong result in 1QFY19 with a growth of 25% YoY in revenues to Rs. 1501 Mn. EBITDA Margins expanded 478 bps YoY to 11.9%. PAT was reported at Rs. 112 mn with 115% YoY growth.</li>
<li>
<p>Our PAT estimates for FY19E-20E remain unchanged. We expect the PAT to grow at a CAGR of 23% over a period of FY18-20E with PAT margins to be in the range of 8-9% from current levels of 7%. </p>
</li>
<li>We have changed the valuation methodology of the company. We now value Apcotex chemical business at 24x the EPS of Rs.26.9 for the year ending June 20E. We add net cash per share of Rs.31 as on March18 to arrive at a Fair value estimate of Rs.675/-.</li>
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<table class="table table-striped">
<tbody>
<tr>
<td style="width: 164px;"> Particulars</td>
<td style="text-align: right; width: 156.242px;"> FY17 </td>
<td style="text-align: right; width: 171.758px;"> FY18 </td>
<td style="text-align: right; width: 169px;"> FY19E </td>
<td style="text-align: right; width: 183px;"> FY20E </td>
</tr>
<tr>
<td style="width: 164px;">PE (x)</td>
<td style="text-align: right; width: 156.242px;">                   38</td>
<td style="text-align: right; width: 171.758px;">                     31</td>
<td style="text-align: right; width: 169px;">                    24</td>
<td style="text-align: right; width: 183px;">              20</td>
</tr>
<tr>
<td style="width: 164px;">ROE</td>
<td style="text-align: right; width: 156.242px;">13%</td>
<td style="text-align: right; width: 171.758px;">17%</td>
<td style="text-align: right; width: 169px;">18%</td>
<td style="text-align: right; width: 183px;">19%</td>
</tr>
<tr>
<td style="width: 164px;">ROCE</td>
<td style="text-align: right; width: 156.242px;">16%</td>
<td style="text-align: right; width: 171.758px;">22%</td>
<td style="text-align: right; width: 169px;">24%</td>
<td style="text-align: right; width: 183px;">24%</td>
</tr>
</tbody>
</table>
<div class="content-caption">
<p>Source:Apcotex Annual Report 2018, Trivikram Consultants research as of 6 August 2018</p>
</div>



Apcotex Industries (APCO IN)   reported a strong result in 1QFY19 with a growth of 25% YoY in revenues to Rs. 1501 Mn. EBITDA Margins expanded 478 bps YoY to 11.9%. PAT was reported at Rs. 112 mn with 115% YoY growth.

Our PAT estimates for FY19E-20E remain unchanged. We expect the PAT to grow at a CAGR of 23% over a period of FY18-20E with PAT margins to be in the range of 8-9% from current levels of 7%. 

We have changed the valuation methodology of the company. We now value Apcotex chemical business at 24x the EPS of Rs.26.9 for the year ending June 20E. We add net cash per share of Rs.31 as on March18 to arrive at a Fair value estimate of Rs.675/-.




 Particulars
 FY17 
 FY18 
 FY19E 
 FY20E 


PE (x)
                   38
                     31
                    24
              20


ROE
13%
17%
18%
19%


ROCE
16%
22%
24%
24%




Source:Apcotex Annual Report 2018, Trivikram Consultants research as of 6 August 2018


Apcotex Industries -1QFY19 -Strong Revenue Growth Continues

<p><a href="https://www.smartkarma.com/entities/13310" target="_blank" data-smartkarma-citation="entities:13310:1">Apcotex Industries Ltd (APCO IN)</a> (Apcotex) operates in speciality chemical industry and has a broad range of emulsion polymers available in the market today. It is one of the leading producers of synthetic rubber and synthetic latexes in India.</p><p>Apcotex should be a part of an investor's long-term portfolio for the following reasons:</p><ul class=""><li>Apcotex is engaged in the manufacturing of synthetic rubber chemicals which are used in manufacturing products like footwear, automotive components, rice rolls, moulded items, v-belts, conveyor belts, hoses, etc. whereas the synthetic latex chemicals are used in tyre cord dipping, paper and paperboard coating, carpet backing, concrete modification/waterproofing, textile finishing paints, etc.</li><li>Post the acquisition of Apcotex Solutions (erstwhile Omnova Solutions), it enjoys a monopoly in the Indian synthetic rubber market. The debottlenecking plan undertaken by Apcotex is expected to bring the EBITDA margins to the past levels of 13-14% as well as increase the topline from FY19E.</li><li>We arrive at a Fair Value estimate of Rs. 660 which is likely to be achieved in the next 12 months. This is arrived by applying a multiple of 22x to FY20E EPS of Rs.29.9. We expect the stability in the acquired business and operational leverage plans initiated by Apcotex to drive increased revenue growth as well as improved EBITDA margins.</li></ul><table class="table table-striped"><tbody><tr><td><p>Summary</p></td><td></td><td></td><td></td></tr><tr><td><p>Particulars</p></td><td style="text-align: center;"><p>FY18</p></td><td style="text-align: center;"><p>FY19E</p></td><td style="text-align: center;"><p>FY20E</p></td></tr><tr><td><p>PE (X)</p></td><td style="text-align: center;"><p>28x</p></td><td style="text-align: center;"><p>21x</p></td><td style="text-align: center;"><p>18x</p></td></tr><tr><td><p>Business ROCE (%)</p></td><td style="text-align: center;"><p>22%</p></td><td style="text-align: center;"><p>24%</p></td><td style="text-align: center;"><p>25%</p></td></tr><tr><td><p>ROE (%)</p></td><td style="text-align: center;"><p>17%</p></td><td style="text-align: center;"><p>19%</p></td><td style="text-align: center;"><p>19%</p></td></tr></tbody></table><div class="content-caption">Source: Company, Trivikram Consultants Research as on 30 May 2018</div>

Apcotex Industries Ltd (APCO IN) (Apcotex) operates in speciality chemical industry and has a broad range of emulsion polymers available in the market today. It is one of the leading producers of synthetic rubber and synthetic latexes in India.Apcotex should be a part of an investor's long-term portfolio for the following reasons:Apcotex is engaged in the manufacturing of synthetic rubber chemicals which are used in manufacturing products like footwear, automotive components, rice rolls, moulded items, v-belts, conveyor belts, hoses, etc. whereas the synthetic latex chemicals are used in tyre cord dipping, paper and paperboard coating, carpet backing, concrete modification/waterproofing, textile finishing paints, etc.Post the acquisition of Apcotex Solutions (erstwhile Omnova Solutions), it enjoys a monopoly in the Indian synthetic rubber market. The debottlenecking plan undertaken by Apcotex is expected to bring the EBITDA margins to the past levels of 13-14% as well as increase the topline from FY19E.We arrive at a Fair Value estimate of Rs. 660 which is likely to be achieved in the next 12 months. This is arrived by applying a multiple of 22x to FY20E EPS of Rs.29.9. We expect the stability in the acquired business and operational leverage plans initiated by Apcotex to drive increased revenue growth as well as improved EBITDA margins.SummaryParticularsFY18FY19EFY20EPE (X)28x21x18xBusiness ROCE (%)22%24%25%ROE (%)17%19%19%Source: Company, Trivikram Consultants Research as on 30 May 2018

Apcotex Industries - Dominant Player in Niche Chemicals

India

Apcotex Industries Limited, manufactures synthetic rubber, lattices, and associated items.  The Company's products include styrene butadiene lattices, nitrile lattices, vinyl pyridine latex, and styrene butadiene rubber.

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Apcotex Industries (APCO IN)

Apcotex Industries -1QFY19 -Strong Revenue Growth Continues

Apcotex Industries (APCO IN) reported a strong result in 1QFY19 with a growth of 25% YoY in revenues to Rs. 1501 Mn. EBITDA Margins expanded...

Trivikram Consultants

Apcotex Industries - Dominant Player in Niche Chemicals

Apcotex Industries Ltd (APCO IN) (Apcotex) operates in speciality chemical industry and has a broad range of emulsion polymers available in the...

Trivikram Consultants

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