Stock In Focus: India's Largest Rubber Chemicals Manufacturing Stock, It Surged By Upto 160.8% In 3-Years

Prabhudas Lilladher has asked investors to accumulate shares of NOCIL, it is India's Largest Rubber Chemicals Manufacturing company. Based on the analyst estimates, there is a significant upside of upto 14.68%. If you had invested in this this company three years ago, you would have gained a return of 160.8% on your investment.

About NOCIL

NOCIL began its journey as rubber chemicals producer in the year 1975. It is a part of the AMG (Arvind Mafatlal Group) of Industries, a well-known Business House of India having diversified business interests. With the State of the Art Technology for the manufacturing rubber chemicals, the company has created brands; PILFLEX® Antidegradants, PILNOX® Antioxidants, PILCURE® Accelerators, Post Vulcanization Stabilizer and PILGARD® Pre Vulcanization Inhibitor that are well recognised in both domestic as well as international markets. It has a market capitalisation of Rs 3,824.25 crore.

NOCIL Q3FY Results Update

NOCIL Q3 FY23 numbers were low. Revenue was down by 16% due to low volume demand. The earnings before income depreciation tax and amortization also was affected and contracted the gross margins. "Revenue -16% YoY/-16% QoQ to Rs 3.3 billion on volume drop and pricing pressure, largely led by lower demand in domestic tyre replacement market. Latex exports affected(contributes ~25% of exports; primarily South-east Asia), as demand for rubber gloves contracted. EBITDA at Rs376mn (-26% YoY/ -39% QoQ) witnessed sharp decline on adverse operating leverage, translating into margin of 11.5% (-151bps YoY/ -439bps QoQ). PAT at Rs186mn (-38% YoY/ -48% QoQ) was impacted by higher depreciation." was reported by Prabhudas Lilladher.

Should you buy stock of NOCIL?

Prabhudas Lilladher analyst suggests investors to accumulate the shares of NOCIL, as the analyst feels, despite the near term demand weakness, the company is well placed over medium to long term. Hence in the brokerage report the analyst has revised it downward. "We downward revise our FY24/FY25 EPS estimates by 9%/11% and revise our TP to Rs250 (earlier Rs275) based on 18x FY25E EPS of Rs13.8, factoring in weak demand environment across domestic and export markets. Despite near term demand weakness, NOCIL remains well placed over medium to long term on; domestic tyre industry capex, China+1 strategy, as customers look for security of supplies, sufficient capacity headroom enables capturing demand improvement and net cash balance sheet (Rs1.6bn) and healthy FCF generation of Rs.5.4bn over FY23-25E provides comfort, though increase in supplies by Chinese competition pose risk to volume and spreads. Maintain 'Accumulate' rating given recent stock price correction."

Share price movement of NOCIL

The share price of NOCIL closed at Rs 229.50 per share, 4.89% up on intra-day basis. In one year, the price grew by 6.4%, in three years it surged by 160.8%, but in five years it was up by 23.16%. The 52-week high and low is Rs 294.85 per share and Rs 191 per share receptively.

Disclaimer:

The stocks have been picked from the brokerage report of Prabhudas Lilladher, Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.