Prabhudas Lilladher's research report on NOCIL
NOCIL reported topline of Rs3.7bn (PLe: Rs3.8bn), a decline of 6.2% YoY, due to subdued realization amid aggressive dumping by Chinese peers. As per our calculation, average realization remained flattish QoQ at Rs256/kg, but declined 13% YoY. EBITDAM was also impacted due to higher employee cost and rising raw material cost, especially aniline prices, which have been on an uptrend recently. Volumes in the domestic market continue to be impacted, but the management stated that volumes in export markets have shown a growth trajectory. Overall, capacity utilization stands at 70%, though there is significant variation across products. The company is undertaking Rs2.5bn capex to expand capacities of rubber chemical products that are running at higher utilization. These capacities will come online in H2FY27, and overall, peak utilization is unlikely to be reached within the next 1.5 to 2 years.
Outlook
We believe the company’s performance will continue to be impacted by near-term headwinds. The stock is currently trading at ~33x FY26E EPS. We maintain ‘Reduce’ rating with a TP of Rs262, valuing the company at 29x FY26 EPS.
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