Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

NOCIL - Q4FY22 Result Update - Strong operating performance amidst challenges - BUY

Posted On: 2022-06-28 21:30:45 (Time Zone: IST)


Mr. Nitesh Dhoot - Research Analyst at Prabhudas Lilladher Pvt. Ltd.

Quick Pointers:

- Margin improvement led by price hikes, product mix changes, and operating leverage (inventory build-up to meet short term demand spikes/ supply issues).

- Healthy demand outlook aided by domestic tyre industry capex of over Rs 200 bn over next 3 years and resilient export demand (especially US & Europe).

- Management reiterated its guidance of full utilization of the expanded capacity by Sep'23 (currently at ~75% overall capacity utilization)

NOCIL's growth prospects look encouraging given 1) favorable demand environment in domestic and export markets driving healthy volume growth (+16% YoY in FY22) 2) sufficient capacity headroom enables capturing demand improvement 3) moderate competitive intensity with higher environment compliance costs in China leading to better level playing field 4) Zero debt balance sheet and healthy free cash flow generation of Rs 4.3 bn over FY23-24E provides comfort though crude oil at elevated levels (above USD 100/ bbl) and increase in supplies by Chinese competition pose risk to volume and spreads in FY23/24. We forecast volume growth of 12% CAGR over FY22-24E and tweak estimates to factor improvement in spreads aided by full pass through of cost inflation coupled with operating leverage benefits as it attains higher capacity utilization levels (EBITDA margin at 18.7%/19.6% in FY23/24). Maintain BUY with a revised TP of Rs310 based on 12x FY24 EV/EBITDA implying 19.5x FY24 EPS of Rs 16.0.

Strong quarter led by price hikes: Revenue growth of 44%YoY/ 19% QoQ on higher average realisations (+57% YoY/ +19% QoQ) while volume growth remained flat QoQ and declined 9% YoY. Gross margin at 50.1% (+590bps YoY/ +950bps QoQ) and EBITDA margin at 24.1% (+780 bps YoY / +1110 bps QoQ) on full pass through of input cost inflation, better product mix and operating leverage benefit (higher production levels). EBITDA +113% YoY/ +120% QoQ to Rs 1.1 bn while PAT +85% YoY/ 131% QoQ to Rs 689 mn on higher tax incidence in Q4 (28.2% vs 15.9% YoY; EPS Rs 4.1 (Rs 10.6 for FY22). Increase in core working capital by 87%YoY to Rs 5.7 bn (132 days in FY22 vs 120 days YoY) led by sales growth, inventory build-up and newer RM sources addition, impacted OCF which was - Rs 302 mn vs +Rs 939 mn YoY.

Concall takeaways: (1) Mr. Anand VS (ex-Chemetall India, BASF group) joined NOCIL w.e.f. Mar-22, as Deputy MD (2) NOCIL's domestic market share at ~42% vs. <35% pre-covid. (3) Domestic demand growth in FY23 to be ahead of forecasted GDP growth of 7-8% in FY23 (4) While supply chain challenges persist, NOCIL has taken steps to ensure RM security through sourcing diversification (increasing domestic procurement vs China dependence) (5) Exports contribution at 36% to company's revenue in FY22, while it targets ~40% contribution in the long term (growth from existing and new customers) (6) To undertake debottlenecking for select products while longer term capex to be evaluated simultaneously (7) Global rubber consumption increased 10.6% in CY21 on a lower base of -6.7% in CY20.

Shares of NOCIL Limited was last trading in BSE at Rs. 259.05 as compared to the previous close of Rs. 258.80. The total number of shares traded during the day was 51181 in over 1495 trades.

The stock hit an intraday high of Rs. 262.95 and intraday low of 256.50. The net turnover during the day was Rs. 13242645.00.


Click here to send ur comments or to feedback@equitybulls.com

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Gladiator Stocks - Minda Industries - ICICI Direct

Reliance Industries - Company Update - In fine fettle amidst global uncertainty - BUY

Sector Update - Sugar - ICICI Direct

Initiating Coverage - Hindustan Aeronautics Ltd - ICICI Direct

Rallis India - Company Update - Margin pressure likely to persist in near term..!! - Upgrade to 'BUY'

Indoco Remedies - Q4FY22 Result Update - In-line quarter; strong revenue guidance for US & EU mkt - Upgrade to 'BUY'

Indraprastha Gas - Q4FY22 Result Update - Impressive performance - BUY

KEC International - Annual Report Analysis - Healthy outlook across business segment - Accumulate

Westlife Development - Q4FY22 Result Update - Approaching the tipping point; Buy for LT Gains

Reliance Research downgrades Bajaj Auto to Sell

Gujarat Gas - Company Update - Deftly negotiating through tough times - BUY

Orient Electric - Gaining market share via innovation: initiate with ADD - ICICI Securities

Manappuram Finance - Q4FY22 Result Update - Intense Competition Put Pressure on Yields - BUY

Derivatives Weekly View - June 24, 2022 - ICICI Direct

Stock Tales - Newgen Software - ICICI Direct

Weekly Report - June 25, 2022 - Mr. Mitul Shah - Head of Research at Reliance securities

Gladiator Stocks - Bosch - ICICI Direct

Management Meet Update - Sheela Foam - ICICI Direct

Gladiator Stocks - Mahindra & Mahindra - ICICI Direct

Banks - Modifications to PPI and its impact on cards - Negligible impact, if any, for stocks under coverage

LIC Housing Finance - Q4FY22 Result Update - Fixed rate liabilities could cushion NIM - BUY

Navneet Education - Q4FY22 Result Update - Growth levers in place - BUY

MPC Minutes: Jun-22: All eyes on inflation - Acuité Ratings

Nazara Technologies - Management Meet Update - Breaking through the ESports landscape - BUY

Sector update - Quick Service Restaurants - YES Securities

JK Lakshmi Cement - Q4FY22 Result Update - Strong performance; Valuations drive upgrade - Accumulate

Would it be wise to invest in a home early in your career?

Dr. Reddy's Laboratories - Analyst Meet Update - Multiple growth initiatives - BUY

Dhanuka Agritech - Management Meet Update - 1Q likely to be subdued; all hopes pinned on the monsoons - BUY

BUY Ipca Laboratories - Q4FY22 Result Update - Weak exports; gradual recovery

Acuité expects India's current account deficit to widen to more than USD 90 bn in FY23 - Acuité Macro Pulse

Inflationary concerns will continue to weigh on the pace of economic revival in FY23 - Acuité Macroeconomic Performance index

City Union Bank - Q4FY22 Result Update - Asset quality on the mend - BUY

Banks - BNPL - Early results are not that exciting as yet - Kotak

Acuité expects FY23 GDP growth estimate at 7.5% - Acuité Macro Pulse - Growth - May-22 Edition

Base factor pushes up IIP in Apr-22 to an 8-month high - Acuité Ratings

India Strategy & Q4FY22 Review - Long term growth prospects to overshadow near term uncertainties

India Equity Strategy - Quarterly flipbook: Q4FY22-Cost inflation driving downgrades

FMCG - D2C is here to stay; omni-channel the way forward - HDFC Securities

Automobile Sector - Monthly Quick View - May'22 - Steady Performance Improvement, backed by Gradual Rural Recovery

BFSI - New normal rate cycle; brace for transmission effects - HDFC Securities

SBI Cards and Payment Services - BUY - TP Rs. 1260 - YES SECURITIES

RBI frontloads rate hike amid increased inflationary headwinds - Acuité Ratings

Monetary Policy June 2022 - Axis MF Views

RBI Monetary Policy View - Mr. Dhiraj Relli, MD & CEO, HDFC Securities

Monetary Policy - entering the red zone - Anuj Puri, ANAROCK

Mr. Murali Ramakrishnan, MD &CEO, South Indian Bank on RBI Monetary Policy

Comments on RBI's MPC Policy Jun'22 - Acuité Ratings

Views on RBI Monetary Policy - June 2022

Bayer Cropscience - Q4FY22 Result Update - Healthy all round performance - BUY


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020