Motilal Oswal has given Buy recommendation for NOCIL recommended buy rating on the stock with a target price of Rs 306 in its researc with a target price of Rs. 306 in its research report issued on May 19, 2022

Motilal Oswal’s research report on NOCIL

NOCIL reported a beat on our EBITDA estimate (at INR80/kg, +121% QoQ), with an improvement in realization to INR336/kg (+19% QoQ). Raw material costs in 4QFY22 were higher; however, higher-than-expected realization drove the beat. Volumes declined 9% YoY, but were flat QoQ at 13.8kmt. The management’s focus will be on growing its volumes further, which it has been successfully doing. We expect volumes sold to report 20% CAGR over FY22-24, with the company achieving 70% YoY revenue growth in FY22. There is an ongoing Anti-Dumping Duty (ADD) investigation on three of NOCIL’s products, even though the Center did not accept DGTR’s recommendation for imposing ADD on one of its key product PX-13 in 2QFY22. These products could contribute significant revenue to the overall business.

Outlook

Valuing NOCIL at 22x FY24E EPS, we arrive at our TP of INR306. We reiterate our BUY rating with a 20% potential upside.

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