Sharekhan's research report on NOCIL
Although Q2 earnings beat our modest estimates, volume/margins stayed stressed on Chinese dumping, dragging PAT by 22% q-o-q to Rs. 27 crore. Volumes fell by 5% q-o-q given lower export volumes and a 15% q-o-q fall in EBITDA margins to Rs. 35/kg on pricing pressures. Demand environment stays challenging given recessionary trends in export markets, while domestic demand is robust. High Chinese supply at low prices is a concern for rubber chemical price. We sharply cut FY24E/FY25E ESP by 18%/21%.
Outlook
Demand challenges seems to be reflected in valuation of 20x/15x FY25E/FY26E EPS. Long-term growth outlook is intact on Indian tyre industry’s growth and China plus one strategy would drive global market share gains. Hence, we maintain a Buy with a revised PT of Rs. 250.
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NOCIL - 05 - 10-2023 - khan