08 Aug , 2021 By : Kanchan Joshi
Shares of NOCIL have outperformed as they are up more than 140% in one year and have rallied over 90% this year (year-to-date) alone. NOCIL is the largest rubber chemicals manufacturer in India. Rubber chemicals are specialty organic chemicals. Brokerage and research firm Anand Rathi in a recent note on chemical manufacturing company said that it has maintained a Buy rating on the stock on improved realisations and good outlook.
On the higher realisations (up 20%), NOCIL’s Q1 grew 7% sequentially, though volumes were curtailed by the second wave lockdowns whereas price hikes expanded margins. On the benefits of price hikes in January and April and an improved cost structure, the gross and EBITDA margins rose. The covid second wave-induced lockdowns shut down plants of a few customers, leading to lower volumes which led to modest revenue growth, the brokerage said in a note.
''In the long run, we are upbeat about the company’s performance, backed by the shift of supplies from China to India, recovery in global and domestic tyre manufacturers, strong (global manufacturers) capex announced, rising rubber consumption, more exports and mounting demand globally,'' Anand Rathi has revised its target price upwards on the NOCIL stock to Rs350 from Rs275 earlier.
NOCIL's management guided to the company's global market-share rising to around 8% in the next 2-3 years as Nocil is a key non-Chinese manufacturer with operations across the entire range of rubber chemicals. Though, Anand Rathi sees delay in obtaining client approval for products from the new capacity, auto slowdown, lower realisations as key risks.
Another domestic brokerage and research firm HDFC Securities also has a Buy recommendation on the NOCIL stock with its target price at Rs330. The brokerage said that the rating is premised on ramp-up in capacity utilisation, robust volume growth on the back of pick-up in demand in the tyre industry, and expansion of margin with focus on specialised rubber chemicals.
0 Comment