East India Securities' research report on NOCIL
Q4FY20 revenue of NOCIL Ltd de-grew by 12.0% YoY to Rs2127mn, primarily due to decline in realization. EBITDA margin witnessed a steep contraction of 759bps YoY to 17.2%, largely owing to increase in commodity prices which led to an increase in RM cost by about 405bps YoY to 50.0% of sales. Despite decline in revenues, other expenses grew by 0.8% YoY. Overall, EBITDA reported a decline of 38.9% YoY to Rs366mn owing to lower gross margins and operating deleverage. PAT reported decline of 39.6% YoY to Rs219mn with PAT margin of 10.3% which witnessed a contraction of 470bps.
Currently, the stock is trading at FY22E P/E of 10.3x and EV/EBITDA of 5.5x. We value the stock on forward EV/EBITDA multiple of 7.9x and arrive at target price of 112 per share which offers 34.7% upside from current level. Hence, we maintain BUY rating on the stock. Risk to our call is unforeseen impact on the demand, further lockdowns and volatility in crude oil prices.
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