Buy NCL Industries; target of Rs 210: ICICI Direct

ICICI Direct's research report on NCL Industries

Andhra Pradesh and Telangana region (accounts for 80% of NCL’s sales) have been facing headwinds in terms of pricing. Our channel checks suggest prices in the southern region have fallen 7.3% YoY. In addition, although retail demand is improving, bulk of the demand is coming from infra led spending that is expected to keep prices under pressure. Further, we believe that recent capacity addition by the company will lead to volume push at the cost of pricing.

Outlook

The recent stock price correction has factored in most negatives and the stock is trading at an attractive valuation (cement business is trading at an implied EV/tonne of US$45/t). Hence, we maintain our BUY rating on the stock with a revised target price of | 210/share.