Buy NOCIL; target of Rs 260: Sharekhan

Sharekhan is bullish on NOCIL has recommended buy rating on the stock with a target price of Rs 260 in its research report dated May 30, 2023.

Broker Research

June 01, 2023 / 12:52 IST

Buy

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Sharekhan's research report on NOCIL

Q4FY23 results were strong with 20% beat in PAT at Rs28 crore (up 52% q-o-q) led by better-than-expected volume growth while EBITDA per kg was in-line with our estimates. Sales volumes grew by 26% q-o-q to 13,736 tonnes reflecting recovery in export market; EBITDA margin of Rs36/kg (up 5% q-o-q) was inline as miss in gross margin gets offsets by lower opex and benefit of operating leverage. Q4 volume recovery was impressive but management maintained that fear of recession remains a concern for export markets while domestic demand expected to remain robust. Higher supply from China could put pressure on pricing and thus NOCIL is focused to grow volume from Q4FY23 level while adjusting price depending upon market dynamics.

Outlook

We maintain a Buy rating on NOCIL with a revised PT of Rs. 260. Our expectation of earnings recovery over FY24E-25E led by gradual volume revival, potential global market share gains (benefit of China/Europe Plus One strategy) makes valuation attractive at 16.5x FY25E EPS.

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