Apcotex Breakout, Pullback and Bounce
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1. Buy or Sell at your own risk
2. Don't risk more than 1%-2% of your capital as stop loss
3. Position Size formula:- Stop Loss Amount/(Buy Price-Initial Stop Loss Price)
4. Sell on initial stop loss hit or daily RSI closing below 40
5. Some other ways to sell stocks can be
a. 25% or 50% up in three weeks or less
b. Weekly tailing tops with high volume
c. Exhaustion gaps
d. Heavy daily volume without further upside
e. Largest one day price drop
After the consolidation since September 2021,
APCOTEXIND gave a high volume breakout on 19th April. On 20th April it pulled back to the support level and gave a bounce on Friday. It's a buy with a stop at ₹404.
Other fundamentals:
1. TTM sales growth of 85% and TTM profit growth of 267% (December quarter).
2. Average Roe for last ten years at 15%.
3. Debt to equity at 0.10 (less than 1 is good), Interest Coverage at 36.6 (greater than 3 is good), Current ratio at 1.73 (greater than 1.5 is good).
4. FII steak increased since September 2021 from 0.40% to 0.91% in March 2022.
5. About the company:
Apcotex Industries Ltd is engaged in the production of various types of synthetic latex and synthetic rubber. It was started in 1980 as a division of Asian Paints, manufacturing synthetic latex and was later spun-off as a separate company under the leadership of Mr. Atul Choksey, former MD of Asian Paints Ltd.
6. The company is a leading producer of Synthetic Rubber and Synthetic Latex in India :-
a. Synthetic Rubber :- Nitrile Rubber, High Styrene Rubber, Nitrile Rubber, Nitrile Polyblends and Nitrile powder.
b. Synthetic Latex :- XSB Latex, BP Latex, Styrene acrylics and Nitrile Latex.
It has one of the broadest ranges of Emulsion polymers in the market and is the only manufacturer of NBR (Nitrile Butadiene rubber) in India.
7. The company exports its goods to 40 countries across various industry segments. During FY21, Domestic sales accounted for 82% revenues and exports accounted for the rest 18% revenues.
8. The company's customer base includes companies like ITC, JK Paper, Pidilite Industries, MRF, SRF, Century Enka, BILT, Paragon, Ajanta, Footwear, Relaxo, Jayshree Polymers, and others.
9. Long term credit rating has been upgraded by ICRA on March 2022.
a. The upgrade of the long-term rating of Apcotex Industries Limited (AIL) factors in ICRA’s expectations that the company will be able to maintain a healthy financial performance, led by consistent revenue growth and a sustained margin profile. While the prices of raw materials have increased substantially in the current fiscal, the company passed on the same to its customers and hence was able to sustain the operating margins in a range of 13-16% in the last four quarters. The company is undertaking sizeable capex, which is likely to drive revenue growth, apart from diversifying the product mix and customer mix.
b. The ratings continue to draw comfort from a healthy capital structure and debt protection metrics due to strong tangible net worth and limited reliance on debt. While the metrics are likely to moderate due to the ongoing planned capex, they are likely to remain comfortable. The company’s liquidity profile has remained strong due to healthy operational cash flows and availability of healthy cash and investments. The rating draws comfort from AIL’s strong market position in the synthetic rubber and synthetic latex segments in India and its promoter background with an experience of more than three decades in the industry. The ratings factor in the company’s diversified customer base across various end-user industries.
10. Risk:
60-70% of the company's operating cost comprises of raw materials. Its main raw materials are Butadiene, Styrene and Acrylonitrile. These raw materials are petroleum derivates and hence their prices fluctuate with crude prices.
11. Quarterly results are due on 27th April.
2. Don't risk more than 1%-2% of your capital as stop loss
3. Position Size formula:- Stop Loss Amount/(Buy Price-Initial Stop Loss Price)
4. Sell on initial stop loss hit or daily RSI closing below 40
5. Some other ways to sell stocks can be
a. 25% or 50% up in three weeks or less
b. Weekly tailing tops with high volume
c. Exhaustion gaps
d. Heavy daily volume without further upside
e. Largest one day price drop
After the consolidation since September 2021,
APCOTEXIND gave a high volume breakout on 19th April. On 20th April it pulled back to the support level and gave a bounce on Friday. It's a buy with a stop at ₹404.Other fundamentals:
1. TTM sales growth of 85% and TTM profit growth of 267% (December quarter).
2. Average Roe for last ten years at 15%.
3. Debt to equity at 0.10 (less than 1 is good), Interest Coverage at 36.6 (greater than 3 is good), Current ratio at 1.73 (greater than 1.5 is good).
4. FII steak increased since September 2021 from 0.40% to 0.91% in March 2022.
5. About the company:
Apcotex Industries Ltd is engaged in the production of various types of synthetic latex and synthetic rubber. It was started in 1980 as a division of Asian Paints, manufacturing synthetic latex and was later spun-off as a separate company under the leadership of Mr. Atul Choksey, former MD of Asian Paints Ltd.
6. The company is a leading producer of Synthetic Rubber and Synthetic Latex in India :-
a. Synthetic Rubber :- Nitrile Rubber, High Styrene Rubber, Nitrile Rubber, Nitrile Polyblends and Nitrile powder.
b. Synthetic Latex :- XSB Latex, BP Latex, Styrene acrylics and Nitrile Latex.
It has one of the broadest ranges of Emulsion polymers in the market and is the only manufacturer of NBR (Nitrile Butadiene rubber) in India.
7. The company exports its goods to 40 countries across various industry segments. During FY21, Domestic sales accounted for 82% revenues and exports accounted for the rest 18% revenues.
8. The company's customer base includes companies like ITC, JK Paper, Pidilite Industries, MRF, SRF, Century Enka, BILT, Paragon, Ajanta, Footwear, Relaxo, Jayshree Polymers, and others.
9. Long term credit rating has been upgraded by ICRA on March 2022.
a. The upgrade of the long-term rating of Apcotex Industries Limited (AIL) factors in ICRA’s expectations that the company will be able to maintain a healthy financial performance, led by consistent revenue growth and a sustained margin profile. While the prices of raw materials have increased substantially in the current fiscal, the company passed on the same to its customers and hence was able to sustain the operating margins in a range of 13-16% in the last four quarters. The company is undertaking sizeable capex, which is likely to drive revenue growth, apart from diversifying the product mix and customer mix.
b. The ratings continue to draw comfort from a healthy capital structure and debt protection metrics due to strong tangible net worth and limited reliance on debt. While the metrics are likely to moderate due to the ongoing planned capex, they are likely to remain comfortable. The company’s liquidity profile has remained strong due to healthy operational cash flows and availability of healthy cash and investments. The rating draws comfort from AIL’s strong market position in the synthetic rubber and synthetic latex segments in India and its promoter background with an experience of more than three decades in the industry. The ratings factor in the company’s diversified customer base across various end-user industries.
10. Risk:
60-70% of the company's operating cost comprises of raw materials. Its main raw materials are Butadiene, Styrene and Acrylonitrile. These raw materials are petroleum derivates and hence their prices fluctuate with crude prices.
11. Quarterly results are due on 27th April.
Nota
Great resilience shown by Apcotex even in this market mayhem.Nota
Qtr Sales Var % 48.44Qtr Profit Var % 36.73
TTM Sales growth % 76.99
TTM Profit growth % 124.57
APCOTEXIND recommended payment of final Dividend @ Rs. 3/- per equity share of the face value of Rs.2/- each for the financial year ended 31st March 2022
Nota
APCOTEXIND up another 10%. Buy call given on April 23.
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