Sharekhan's research report on NOCIL
NOCIL reported yet another quarter of strong performance with PAT sharply beating estimates by 36% at Rs. 66 crore, up 40% y-o-y, led by better-than-expected volumes and a beat in EBITDA margin. Strong volume growth of 16%/11% y-o-y/q-o-q to all-time high of 15521 tonnes reflects robust domestic demand while EBITDA margins at Rs. 67/kg (up 20% y-o-y) indicates strong realisation (largely flat q-o-q) and benefit of operating leverage (utilisation rate of 75%). Management expects muted demand in near term and has guided for 10% volume growth for H1FY23. It now expects optimum utilisation of expanded capacity to be delayed by 3-6 months from earlier guidance of Sep’23. Debottlenecking plan to expand existing capacity in order to cater to the rise in demand for the next 1-2 years.
Outlook
We maintain Buy on NOCIL with an unchanged PT of Rs. 348 as we expect robust 24% PAT CAGR over FY22-24E led by potential gain in global market share (benefit of China Plus One strategy) and sustained strong margin. Valuation of 19x/17x FY23E/FY24E EPS seems reasonable considering strong growth prospects.
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