Nocil Q3 Results Review - Challenges Persist: Prabhudas Lilladher

Prabhudas Lilladher Report

Nocil Ltd. topline came inline with our estimates at Rs 3.4 billion (our estimate: Rs 3.4 billion), however, Ebitda/profit after tax came in above estimates at Rs 477/298 million (our estimate: Rs 385/221 million. As per our calculation, average realization remained flat at Rs 272 /kg on QoQ basis and declined 9% YoY.

Ebitda grew 9% QoQ to Rs 38/kg. Non latex segment saw some growth but latex demand was bottomed up. The management of the company believes that -

1. Q4 FY24 will be better than Q3 FY24,

2. Domestic tyre industry is expected to grow at a CAGR of 3-6%,

3. Capacity utilisation to improve, currently 62-65% is utilised.

The stock is trading at ~24 price/earning on FY24E EPS. We maintain ‘Reduce’ rating with a target price 254 valuing the company at 22 times FY26 EPS.

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