Buy NOCIL; target of Rs 255: Motilal Oswal

Motilal Oswal is bullish on NOCIL recommended buy rating on the stock with a target price of Rs 255 in its research report dated May 30, 2023.

Broker Research

June 01, 2023 / 14:15 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on NOCIL

NOCIL reported a 13% beat on our absolute EBITDA estimate with EBITDA/kg at INR35.6/kg, up 6% QoQ, with realization declining 4% QoQ (at INR285/kg, down 15% YoY). Sales volumes increased 26% QoQ to 13.8tmt, primarily driven by the recovery of export volumes, leading to an overall uptick in volumes during the quarter. The company achieved its highest quarterly volumes and revenue in 1QFY23. However, as global demand slowdown started to kick in from 2Q, the company’s performance started to decline. Despite a decrease in volumes, the increase in product prices helped mitigate the impact in FY23. Subsequently, the share of exports to total revenues decreased to 31% in FY23 from 36% in FY22. Due to the sluggish demand in China, there has been an influx of additional volumes into the international market at significantly reduced prices. Inflationary pressures and fear of recession still persist with the management focusing on growing its volumes, maintaining EBITDA/kg and increasing wallet share to navigate the global macro uncertainties. According to the management, the outlook of domestic tyre companies remains robust, with the industry expected to grow ~10% annually over the next several years.

Outlook

The stock is trading at 17x FY25E EPS of INR12.7 and 10x FY25E EV/EBITDA. We expect the return ratios to be stable at 10-12% in FY24-25. We reiterate our BUY rating on the stock with a TP of INR255.

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