Nocil Q1 Results Review - Muted Domestic Demand To Persist: Prabhudas Lilladher

Prabhudas Lilladher Report

Nocil Ltd. reported topline of Rs 3.7 billion (our estimate: Rs 3.8 billion), a decline of 6.2% YoY, due to subdued realisation amid aggressive dumping by Chinese peers.

As per our calculation, average realization remained flattish QoQ at Rs 256/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 utilisation stands at 70%, though there is significant variation across products. The company is undertaking Rs 2.5 billion capex to expand capacities of rubber chemical products that are running at higher utilization.

These capacities will come online in H2 FY27, and overall, peak utilisation is unlikely to be reached within the next 1.5 to two years. We believe the company’s performance will continue to be impacted by near-term headwinds.

The stock is currently trading at ~33x FY26E earnings per share. We maintain ‘Reduce’ rating with a target price of Rs 262, valuing the company at 29 times FY26 EPS.

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