Reduce NOCIL; target of Rs 209: Prabhudas Lilladher

Prabhudas Lilladher's research report on NOCIL

NOCIL reported revenue of Rs3.2bn (PLe: Rs3.7bn, Consensus: Rs3.6bn), marking a sequential decline of 12.3%. The topline was impacted by a 10% QoQ drop in volumes and lower realizations which were driven by a decline in raw material prices. Based on our estimates, the average realization stood at Rs248/kg, reflecting a YoY decline of 9.1%. While sales volume grew 3% YoY, EBITDA/kg dropped 52% YoY due to higher operating leverage, leading to a 670bps YoY contraction in EBITDAM. Capacity utilization stood at 65%, though usage varied significantly across product lines. To meet rising demand for select rubber chemicals, with plants already operating at high utilization levels, the company is investing Rs2.5bn in capacity expansion. These additional capacities are expected to come online in H2FY27, though peak utilization across the portfolio may take another 1.5 to 2 years. Near-term headwinds are expected to persist.

Outlook

The stock is currently trading at ~29x FY27 EPS. We maintain our ‘Reduce’ rating with a target price of Rs209, valuing the company at 27x FY27 EPS.

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