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This is the 5th post in our quarterly result update series for Q4FY21.

In this post, we’re sharing the latest updates of the stocks from our watchlist. Please don’t treat this as a buy recommendation. We find these businesses interesting and we may build position (or buy more of those that are already in our portfolio) in them in the future. The purpose of this post is to bring clarity to our understanding of the businesses we are tracking.  We make our notes on the quarterly results and conference calls. Putting it up here makes it easier for us to refer them at a future date.

You can see the earlier updates here.

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Please click on the read more button for more details on each stock.


Apcotex Industries

Apcotex had its best-ever quarter again with its highest revenues, export volumes, EBITDA, and record profits. The margins have also risen above 16% for the company and the management expects it to stay in the range of 14-15% going forward. The company is now looking to start the capacity addition of the XNB latex at Walia as soon as it gets the required permits and the monsoons end. The antidumping petition by the company is still pending approval but is expected to get a decision by Q1FY22. This has caused the management to maintain its pause on its plans to expand NBR production lines. To cope with the delay in capacity expansion in XNB latex, Apcotex is looking to expand capacity by 5-10% through debottlenecking which should be over by Q1. It remains to be seen how the demand for the company’s products changes going forward and whether the current margins and demand profile remains sustainable given the uncertainty in the country from the 2nd wave of COVID-19. Nonetheless, given the company’s industry-leading position in the domestic market, the prudent management of the company, and the management’s optimism from its on-track Capex plans, Apcotex seems to be a good chemical stock to watch out for.

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Blue Star Ltd

Blue Star has seen a decent recovery in revenues and profits for Q4FY21. It saw a good recovery in all businesses including the RAC segment which outpaced industry growth and saw the company’s market share rise to 13.25%. The company has done well to rationalize inventory and order ahead for raw materials and institute price increases of 3-5% which has helped it counter the RM price inflation. The demand for end-to-end cold chain products remains resilient and has replaced traditional demand from restaurants and others for the commercial refrigeration business. It has also seen good growth in the water purifier segment achieving breakeven and reaching a market share of 3%. It remains to be seen what disruptions the company will have to face from the RM shortage and the impact on consumer behavior from the 2nd wave of COVID-19. Nonetheless, given the company’s strong market presence, its history of completing EMP projects, and its robust presence in semi-urban and rural India, Blue Star is a pivotal white goods stock to watch out for.

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Tata Consumer Products

TCPL has seen good growth in both value and volume terms across all segments, especially in the tea and salt businesses in both Q4 & FY21. It has also been able to complete almost all of the internal integration and is now focussing on expanding the reach. The long-term growth runway for both Sampann and nutrimixes remains intact, especially given its underrepresentation in the general trade channel. The margins in the tea business have remained subdued due to high RM costs but the management expects it to come down going forward. It remains to be seen how the company’s tea prices affect TCPL’s margins going forward and how the company will fare against other branded players like ITC in the fast-rising branded staples category. Nonetheless, given the company’s leadership position in its top brand segments, its enhanced distribution reach after the merger, and the incoming synergies and benefits from integration, Tata Consumer Products remains a good FMCG stock to watch out for.

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Ultratech Cement

Ultratech has done well to acquire aging cement makers in India and integrating them and adding on to the company’s ever-growing market presence and reach in the country. Ultratech has had a phenomenal quarter with sales growth of 30% and profit growth exceeding 61% YoY barring exceptional items. The company is doing well to focus on cash conservation and cost reduction while maintaining its steady pace of debt repayment. It has now managed to reduce by >Rs 10000 Cr in FY21 and has delivered net debt to EBITDA of 0.55 times. It remains to be seen how long the rural market will remain subdued due to COVID-19 and whether govt infra projects will continue to execute as normal during the 2nd wave of the pandemic. Nonetheless, given the company’s leadership position in the industry, its wide distribution network across India, and its strong brand image, Ultratech Cement remains a pivotal cement sector stock for all Indian investors.

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