NOCIL (NSE:NOCIL) Q1 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to the Q1 FY 'twenty seven NOCIL Limited Conference Call. This conference call may contain forward looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for... To ask questions after the presentation concludes. Should you need assistance during this conference call, Please note that this conference is being recorded.

0:47 I now hand the conference over to Mr. B. S. Anand, Managing Director from NOCIL Limited. Thank you, and over to you, sir. Yes. Good morning. Good morning to everyone. I'd like to start by expressing my appreciation for your presence today. Joining me are Mr. P. Srinivasan, our Chief Financial Officer and our Investor Relations Advisers from SGA. I hope you have all received our investor presentation. If not, it's available on both the stock exchanges and our company website. Let me begin by providing an overview of the company's performance for quarter one financial year 'twenty seven. We started financial year 'twenty seven on a strong note with revenue from operations reaching INR403 crores, reflecting an impressive 20% year on year growth driven by growing volumes and increase in selling prices on account of increase in raw material costs.

1:41 The company delivered a healthy 9% volume growth compared to quarter one financial year twenty twenty six, driven by sustained demand across key end markets. Domestic volumes registered double digit growth, supported by improved demand from the implementation of GST 2.0. Export volumes also recorded single digit growth driven by successful conversion of ongoing customer engagements into business gains and continued traction in international markets. This balanced performance across both domestic and export businesses highlights our ability to capitalize on market opportunities while strengthening customer relationships and expanding our global footprint. While we are encouraged by these results, we also remain realistic about the operating environment.

2:27 Global markets continue to experience geopolitical uncertainties, supply chain disruptions and a competitive pricing landscape. On a sequential basis, revenue grew by a robust 22% over the previous quarter. Volumes, however, witnessed a moderate decline of 3%, primarily due to temporary supply side constraints related to utilities and logistical challenges arising from the ongoing geopolitical situation, which resulted in the postponement of certain order commitments. These challenges were operational in nature rather than demand driven, with underlying customer demand remaining healthy. We did see a temporary demand contraction in the non tire segment due to lower production on account of a sharp increase in input costs and shortage of labor due to the cooking gas shortages during the quarter.

3:17 We continue to work closely with our suppliers and logistics partners to normalize supplies and execute the pending orders, and we remain confident of recovering the deferred volumes in the coming quarters. With respect to the antidumping petitions filed with the Government of India, the central government has approved the imposition of antidumping duty on sulfonamides covering both CBS and NS on 06/20/2026. On the other product front, the PilFlex 13, the Director General of Trade Remedies, DGTR, issued a positive final recommendation in June 2026. The implementation of the antidumping duty on PilFlex 13 is now subject to the approval of the Government of India. The tire industry continued to witness healthy domestic demand during the quarter, supported by strong replacement demand and healthy OEM offtake across both the passenger and commercial vehicle segments, still aided by the implementation of GST 2.0 and ongoing infrastructure activities.

4:21 While some moderation in demand is expected in the near term owing to seasonal factors and the progress of the monsoon, These are expected to be temporary in nature. The underlying industry fundamentals remain strong, supported by healthy replacement demand, continued momentum in OEM volumes and favorable long term growth drivers. Accordingly, the overall demand outlook remains positive, and the industry is well positioned to navigate the near term challenges while sustaining its long term growth trajectory. In the international tire markets, even as the overall volume showed a minor dip in the first half of the calendar year, mainly on account of lower OEM volumes, the replacement market held positive, reflecting a healthy demand. Coming back to NOCIL.

5:07 Trial production at our new TDQ plant in The Hague is coming along well with initiation of samples to customers. As approvals progress and commercial supplies ramp up over time, we believe this investment will further reinforce our competitive position in the market. Our new INR130 crore investment in the hedge is also progressing well, and our teams have done a great job of keeping it on track in spite of the challenges and disruptions we've been witnessing on account of the war in the last few months. As we look to expand our product portfolio, our R and D and technology teams are working very closely with customers on new products, and we expect positive traction during the course of the year. Looking ahead, while we remain mindful of the uncertainties that continue to exist in the global environment, we are optimistic about the direction in which the business is progressing.

5:58 We expect revenue for financial year 'twenty seven to be in the range of INR 1,400 crores to INR 1,600 crores, basis the current pricing environment with EBITDA in the region of 10%. Our focus will remain on executing our strategy with discipline, driving operational excellence, expanding our product portfolio, deepening customer relationships and maintaining a prudent financial management. With this, I now invite Mr. P. Srinivasan to provide an overview of our financial performance. Following his remarks, we will be pleased to take your questions. Thank you, Mr. Anand, and good morning to everyone. Now let's run through the consolidated key financial highlights. The sales volume for Q1 FY 'twenty seven was 145 index, taking a base of 100 as Q1 FY 'twenty.

6:48 Revenue. The net revenue from operations for Q1 FY 'twenty stood at INR $40.03 crores, registering a strong growth of 20% Y o Y from INR $3.36 crores in Q1 FY 'twenty six and twenty two percent Q o Q from INR $3.30 crores in Q4 FY 'twenty six. Volumes, as Anand stated, volumes recorded a healthy 9% Y o Y growth in Q1 FY 'twenty seven compared with Q1 FY 'twenty six, while we witnessed a moderate 3% sequential decline compared to Q4 FY 'twenty six due to temporary supply side constraints and other logistics issues. On the operating EBITDA performance, EBITDA for Q1 FY 'twenty seven stood at INR 45 crores, registering a strong growth of 48% Y o Y from INR 31 crores in Q1 FY 'twenty six and INR 115 percent Q o Q from INR 21 crores in Q4 FY 'twenty six.

7:39 EBITDA margins for Q1 FY 'twenty seven stood at 11.2%, expanding by two ten basis points Y o Y compared to Q1 FY 'twenty six and above by four eighty basis points Q o Q compared to Q4 FY 'twenty six. Profit before tax, PBT for Q1 FY 'twenty seven stood at INR 37 crores, registering a strong growth of 60% Y o Y from INR 23 crores in Q1 FY 'twenty six and seventy seven percent Q o Q from INR 21 crores in Q4 FY 'twenty six. Profit after tax for Q1 'twenty seven stood at INR 28 crores, registering a strong growth of 61% Y o Y from INR 17 crores in Q1 FY 'twenty six and sixty three percent Q o Q from INR 17 crores in Q4 FY 'twenty six.

8:26 With this, we would like to open the floor for question and answers. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. The first question is from the line of Neera from Anvil Belt. Please go ahead. Yes, sir. Good morning, and congratulations on a very good set of numbers. Sir, a few questions to ask. So sir, as you mentioned in your opening remarks that because of the supply side challenges, we could see a moderate dip in our Q on Q volumes by close to around 3%.

9:23 So I presume that this quarter would have some benefit of the low cost RMC also. So like moving into Q3, Q2, Q3, how do you see the EBITDA run rate which we have achieved this quarter? So do you believe that this EBITDA run rate can be more of a sustainable number which we should work with given the fact that any dip in the gross margins per kg could be compensated through the benefits of operating leverage, which we could see through higher volumes? Yes. Thank you, Neeraj. Yes. So while the like I mentioned in my speech, while there could be a bit of small adjustments in the EBITDA, overall for the year with the combination of the volume growth also kind of kicking in as well as operating leverages, we expect to hover around 10% of EBITDA. Yes, that's our expectation.

10:25 And sir, what sort of volume growth we have assumed in this top line number which you have mentioned? Around 10%, yes. Okay. 10% for the full year? Yes. Got it. Also, like on the conversion cost side, what we could see that this quarter, our conversion cost on a sequential basis has gone up from INR 110 crores to INR 130 crores. One of the reason could be the employee cost, which normally we have seen in first quarter of every financial year, there is an increase. But excluding that part, were there any non recurring expenses, which won't be repeated in quarters to come? So if you can just highlight this increase in the conversion cost, which has happened this quarter.

11:15 So Neeraj, Srinivas here. Thank you for the question. So basically, there are a few things which is there. One is, in this quarter, as we witnessed the Middle East war crisis, we had logistic challenges. Obviously, the freight rates went up. So there was some increase on account of that, which if the economic situation stabilizes, so hopefully, this corrections will happen. But till this time, this crisis remains, you will see an inflated cost on that. Secondly, we generally, our commitments towards CSR is on the higher side in the first quarter, Though it is at the end of the year, it evens out. But since the expenditure is already incurred, so there was some additional money spent on CSR. Thirdly, there were some challenges on the utility spend. We were all aware the gas prices went up significantly because the Middle East Crisis.

12:03 Gas availability issue was there. Operational constraints were imposed by the regulatory bodies because we have to operate the planet certain throughput rates. So based on that, some additional cost came in the utilities front. We also had a manufacturing improvement in volume terms. If you see in the stock change, there is a INR 45 crores related to the stock change. So that also played a role. And lastly, there were some maintenance issues at our plant. So that also had led to some corrections and some inflated costs, which we feel those things will get evened out. It will these are all one off expenses. But I think this is a broader story, which we can give reasons. Correct. So sir, if you can just quantify what could be this one off cost, which won't be repeated in the next quarter, including the employer cost, which we have seen on an higher set this quarter?

12:53 So employee cost, I think, will get stabilized. That will get hopefully will come down because generally, the returns gets loaded in the valuations as and when the increments get rolled out. But as far as the utility cost, I think this is purely the pricing because as and when the oil prices stabilize, hopefully, the utility cost will come down. Some of you crores will come down on account of this one off maintenance cost, etcetera, that will be a onetime expenses, which will not be repeated. Got it. Sir, last from my side, like what we have seen that you mentioned that the approvals from the customers is so far as the TDQ plant is concerned, we have started getting the samples approved from the customers. So best of our understanding, when can we see the volumes coming from the TDQ plant materially for NOCIL?

13:49 What could be those period? And can this improvement in volumes from TDQ plant can take over run rate to or the indexation to let's say 160,165 in quarter four of FY twenty twenty seven? Can that numbers be workable, sir? So the approvals are expected so it takes typically about six to eight months, right, which we've been talking sometimes even lesser. So we should start seeing it fast reclining in quarter four, but more into going into quarter one of next year is when I see the numbers coming in. But I think we should start seeing those first things coming in quarter four.

14:40 Got it. And what was the mix of export and domestic volumes in the first quarter, if you can just share the mix? In the first quarter, we see exports about 33%, roughly 33% and domestic 67%. This is the volume part you are mentioning, sir, right? Yes. Perfect, sir. Thank you, sir, and wish the team all the best for the future. Thank you. Thank you. You. The next question is from the line of Praveen Kumar from Accutus Capital Advisors. Please go ahead. Yes. Hi. Thanks for the opportunity. I had a few questions. The first one was on the volumes.

15:29 So while you have alluded to logistical challenges, etcetera, in fact, the volumes. But I think from a Q4 perspective, we were talking about Q4 to Q4 improvement from there. And also, in terms of exports, we were expecting a double digit kind of a volume growth expectation for the year. So versus that, if I look at your overall FY 'twenty seven volume, what you're talking about, about 10%. So has there been a, I mean, revision downwards internally due to, you know, the evolving geopolitical situation? Is that what is driving the overall volume growth expectation for FY twenty twenty seven? Or is it driven by reassessment on the domestic front, if you could proceed light of that? Yes. So we like there has been some kind of small impact on the non tire sector in the quarter, but not necessarily in tire.

16:25 And that there we see still the robust demand continuing. And we have not kind of scaled down. We still see that for the full year compared to financial year 2026, we should keep up the 10% growth rate. So I don't see that flagging. They're not kind of scaled down the numbers in any way as yet. Understood. And on the antioxidant front, if I look at the import data on antioxidant, there seems to be an increase in import volumes there. And the realization seems to, on a Y o Y basis, continue to contract on the antioxidant front. So in light of, you know, so in light of the fact that TDQ that ADD was not approved by the ministry specifically. Right? And you are putting up this... I mean, your t d p... TDQ volumes are up for... From this new facility.

17:26 So how do you see this entire antioxidants piece playing out? If you can throw some light on that in in light of all these, you know, developments, continued dumping, continued foreign relations and, you know, that ADD was not approved by the Ministry. So for TDQ, we are looking at both increase in volumes in the domestic market as well as in the international markets. And given the fact that it has a wide range of applicability, not only limited to tires, but also the non tire sector, we see that there are sufficient opportunities to grow it in spite of the fact that we didn't get the antidumping. And like we had also mentioned earlier, we do keep having and structuring plans for different scenarios.

18:17 So we still have a road map to continue to grow volumes, both in the tire and the non tire sector, albeit even the domestic as well as the international markets here. And how do you plan to counter this increased dumping on the antioxidant front and the falling realizations, if you could? So we have not at least in the we've not seen a significant change in the import number because I also we have limited visibility on that. But that also we don't see a significant increase in influx on account of any of these anti dumping changes that are happening. And on accelerators, there was a, think, recent announcement that one of your large Chinese computer, China Sun side, was putting up additional capacity in one of the accelerators.

19:16 So if you could throw some light on how that could impact either pricing or volumes on that front. Yes. So that was also one of the reasons that we had approached for the antidumping on the accelerator. So those capacities you're referring to was also the one of the intermediates to the main accelerators. And we have so we have a position both not only in domestic, but also with international customers on that front. And we are able to compete at this point with also the antidumping duty now that's in place. Understood. And lastly, on the you have referred to the geopolitical situation and logistics impacting pushing out volumes from this quarter. But do you see any improvement on the front in this in this current quarter, what you're seeing? Or do you continue to see uncertainty and, you know, if you could throw some light on that?

20:17 Yeah. So the... There is there is continued uncertainty definitely on the front of raw materials. I think the... You have to take those calls because it does keep moving up and down like it has happened in the last few weeks depending on the geopolitical situation. But we're not seeing any significant impact on demand as yet. So we still see it as positive. But there is going to be this uncertainty on pricing of raw materials and availability is something that we'll need to keep a close watch on. Understood. Thanks for the response. Thank you. Thank you. You. The next question is from the line of Aditya Khetan from Smith Institutional Equities.

21:07 Please go ahead. Thank you, sir, for the opportunity, and congrats on a good set of performance. So just a couple of questions. Sir, in your opening remarks, you mentioned some INR 1,400 crores to INR 1,600 crore top line number for 'twenty seven, and you also mentioned some 10% margins. So that comes out to INR 140 crores to INR 160 crores. So when we look compared to '26, you're talking of 10% volume growth. So ideally, we are talking of some around 30% to 40% pricing growth, that means. Just to know more on on to the pricing part, so are we assuming like the for this war related benefits of higher realization that would sustain going ahead? Or it is also the antidumping duty benefits coming in from the sultanamide accelerator or the better product mix. Like these are the factors which you are keeping in perspective of 30% to 40% higher realization growth.

22:08 Yes. So it's a combination of all, which is surely, like you mentioned, we'll have to get also realistic that there is expected to be some moderation. It will not be at the same levels at quarter one, but there will be some moderation. And it is a combination of volume, also product mix, also coming from the fact that better price realization in the domestic market for accelerators and operating leverages that will come. Is it possible to quantify the inventory gains during the quarter? Any ballpark numbers are good. Let me just check, but maybe not right away, we'll kind of come back to you on this.

22:59 Got it, sir. Sir, when we look, so during the quarter, a 9% Y o Y growth and you also mentioned, like, the non tire segment that is more of a subdued as of now. But, sir, when we look at the commentary of the India's largest... So latex player, so they have stated that demand is quite good, and they have been also been able to take the price increase. Ideally, means so whatever demand commentary they have given, so so that looks good. But we are saying like it is more of a subdued. Anything, sir, you can correlate like... So what what I was mentioning also was it was kind of a transitionary element, was temporary in nature, more because of the quite a few of our so again, when you speak about the non tire is multiple sub segments, right? It's one not flattish, but there are multiple sub segments.

23:53 And there's also a high dependency in those smaller companies on contract labor and also when input costs went up, many of them also had to seize production for some time. So these things played out in the quarter, but it was more transitionary and we expect that demand to kind of come back. So the 9% like volume growth in this quarter on Y o Y basis, so possible to like state like how much was from the tire side and non tire side? So like I mentioned, it was more skewed towards the tire sector, lesser on the non tire side, yes. Lesser on the non tire side. Okay. Got it.

24:39 Sir, just one last question. Sir, on to the promoter holding side, like we have seen recently the promoter holdings are being pledged again. So one of the promoter biggest promoter like their holdings are pledged by roughly around 24%. Anything, sir, like you can take up why is the promoter holding again getting placed? I think we can't comment on that. That's promoters in their offices call. So we prefer to remain noncommittal on that. Got it, sir. Thank you. That's it. Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touch tone telephone.

25:30 Participants, if you wish to ask a question, you may press star and one on your touch tone telephone. The The next question is from the line of Pawan from Leon Securities. Please go ahead. Hello. I'm audible. Yes, sir. You're audible. Please go ahead. So my question was on HD recently. That was recently applied. So my question was like how much relation we have gained right after this ADD? Sorry, the ADD has been notified on June 20. So for the quarter end of June, I think there is no gain there. I think it will get eventually panned out because it all depends on how much the foreign import producers absorb that. So that's will derive only at the end of the quarter, not today. So as far as the quarter ended June, nothing is there.

26:48 Thank you. The next question is from the line of Dia Jain from Saphyr Capital. Please go ahead. Thank you for taking my question. So the q one growth that we had, can you quantify how much was volume led and price led? And can we expect the realizations to sustain in the coming quarters? Yes. On the let me just check on the split, but on the realization outlook, I've given an indication that it's the slight moderation, but overall for the year, we expect EBITDA to be at a certain range. In terms of the split that we had given just one second, please.

27:50 Yes. So I think we already announced in our opening remarks that Q1 volume growth was 9% as compared to the previous year first quarter. As far as the sequential quarter, we are having a moderate decline of minus 3% as far as the volume parameter is concerned. And as far as the revenue parameters, I think we mentioned about 20% to 23% for the relevant comparable periods. Okay, sir. And another question, the plant, are we expecting any revenues to come in this year? Your voice is not so clear. Can you just repeat that, please? Alright. Is it better now? Yes. So from the strategic plan, are we expecting any revenues to come in this year?

28:40 Yes. Yes. It... There there will be revenues coming in this year. Yeah. And what realizations... Sorry. Utilizations will be hit? No. So like I've mentioned, we have an approval process. So we will start with the non tire, both domestic as well as international. And gradually tire companies, as they start approving those volumes, start coming in the next couple of quarters. Sir. Thank you. Thank you. The next question is from the line of Praveen Kumar from Accutest Capital Advisors. Please go ahead.

29:28 Yes. Hi. Thanks again for the opportunity. My question was on PX-thirteen ADD that was approved by Digital recently. In the previous the previous time that the DGTR had approved it in '21, the ministry had kind of rejected the appeal at that time. So what what do you think is different this time which can, you know, could could possibly result in a different outcome in terms of the, you know, overall application and the environment? If you could throw some light on that. See, this is central government's prerogative. They ask for the provisions of the statute. The DGTR is a recommended authority.

30:14 This is a quasi judicial investigation proceedings, wherein all the stakeholders' views are taken into account and then a very detailed order is given. The prime of ACD, DGTR is convinced that there's a dumping, and therefore, there is an applicable ADT finalization or recommendation has been given. However, the central government looks at things beyond that, and they have some other issues also in terms of public interest and other national interest. So they have within their jurisdictional power to accept, reject whatever they wish to. And typically, this is these powers are exercised within a window of ninety days as per the statute. So today, we cannot comment what is the view of the settlement because it's purely discretionary in their regime.

31:02 We are hopeful that we will make adequate representation whatever is needed to substantiate our case. Now we will wait for the outcome maybe by end September. Just to build on that Praveen, so I think the environment also is very clear because this is a very long fifteen month to eighteen month investigation where the dumping and injury margins are very strongly backed. So we are quite positive that it will be seen in the positive light. Appreciate what you're saying. I just want to understand that, see, I understand that the government will look at factors, all of which cannot be enumerated. But I wanted to understand more from an industry perspective that what has changed in terms of capacity or profitability of the product, etcetera, which could make a difference this time. That that was my question. I understand that there are other factors the government might look at, which you may not have a solid view on. Right? But in in terms of the other parameters, like industry capacity in the product or, you know, profitability of product, etcetera, has there has there been a substantial change between the last application and now?

32:14 Yes, yes. So actually, if you see something like this product that you referred to can be catered to entirely by domestic manufacturing. And then that's and clearly, all domestic producers are under stress as far as on account of the dumping that's happening. And that's quite clear. So even compared to the previous period, is even more severe, yes, to answer your question. Understood. Thanks for that. My second question was on the last several months, INR has depreciated against both the USD as well as the Chinese yuan. Right? So specifically, you know, because a lot of our products have... We compete with the Chinese. So has there been a specific depreciation benefit that we are seeing in terms of volumes and, you know, conversations with with the clients in the export markets and also on the domestic front in terms of the Chinese imports being costlier?

33:16 Not any significant change, Praveen. We've not yes, you're absolutely right on the data points that you mentioned. But we have not seen a significant impact on account of that. Is that because these the Chinese players are continuing to access their yuan prices downwards and is that probably the reason? Yes, yes. That's right. That's right. And still, think, our chemicals is still a product group that still enjoys the export subsidy. Understood. Thanks. Thanks for the response. Thank you. You. The next question is from the line of Aditya Khetan from Slice Institutional Equities. Please go ahead.

34:03 Thanks again, sir, for the opportunity. Sir, my question was on to the antidumping duty part. Sir, excluding for TDQ, considering, like, CBS and as we have the duty, considering if PayFlex thirteen also is is that duty is is notified. So what could be the total top line that would be covered under the ETD, excluding for the TDC segment? This would be about totally about 25% to 30%. 25% to 30%. Okay. And sir, just what we were like for the benefits of ADD that would be flowing to EBITDA, would it be of the similar quantum which we have seen in the last cycle or it would be slightly lower from that?

34:53 Any sort of direction can help? It's a bit premature today. Unless all the calculations and see and then how the results come in, in the second quarter, third quarter, then we can probably comment on that. It's too premature to comment today. Because we don't know how much the foreign players will absorb those things needs to be seen. Sir, my second question was on to the exports part. Like you mentioned, it is at around 33%. Any targets, sir, like we are looking for 28%, 29% to take it to around 40%, 45 Directionally, you're right, Aditya, that's the way it will go. So yes, because also from our presence in the international markets, will be the direction it will go. Yes.

35:43 Got it. And sir, the newer expansion like which will come so one to two years down the line like you mentioned in last quarter that is more focused on to the specialty segment. How you see like that segment to move on like from the current so 15% overall top line levels? So this is a clarity portion, how much potential it has to move from these levels to around say just around 20%, 25%? Yes. So that should add to that. So I would expect at least another 5% to 10% we should see an additional, yes. 5% to 10%, okay. Yes. Okay, Thank you. That's it. Thank you. You. Question, you may press star and one.

36:36 As there are no further questions from the participants, I now hand the conference over to Mr. V. S. Anand for closing comments. Thank you. Thank you, everybody, for your time. On behalf of the entire NOCIL team, I would like to thank our customers for their continued trust, our employees for their unwavering commitment, our Board for its guidance and our shareholders for their continued support and confidence. I hope we've been able to address all your queries. For any further information, kindly get in touch with any one of us or strategic growth advisers, our Investor Relations advisers. Thank you once again and wishing everyone a very pleasant afternoon. On behalf of NOCIL Limited, this concludes this conference. Thank you for joining us, and you may now disconnect your lines.