East India Securitie's report on NOCIL
Q1FY21 revenue of NOCIL Ltd de-grew by 53.6% YoY to Rs1065mn, severely impacted due to lockdown in the country which led to temporary shutdown of the operations which led to decline in volumes. However, realizations remained fairly stable. Gross margins contracted sharply by 760bps to 48.8% in Q1FY21. EBITDA margin reported contraction of 1715bps to 7.5% YoY (vs our estimate of 9.5%) led by sharp gross margin contraction. Overall, EBITDA de-grew by 85.9% YoY to Rs80mn (vs our estimate of Rs106mn). This was majorly due to decline in revenues. Other income grew by 315% to Rs107mn and company reported tax credit of 263mn on the back of Rs515mn as write back of excess provisions relating to earlier years. Higher than expected other income and tax credit led PAT to witness a de-growth of 63.7% YoY to Rs120mn (vs our estimate of Rs28mn) in Q1FY21. We believe that the performance of Q1FY21 does not represent a normal quarter and thus comparing with previous quarter numbers will not give a correct picture.
Currently, the stock is trading at FY22E P/E of 17.2x and EV/EBITDA of 9.7x. We value the stock on forward EV/EBITDA multiple of 9.2x and arrive at target price of 126 per share which indicates downside of 4.9% from current level. Hence, we maintain HOLD rating.
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