Prabhudas Lilladher’s research report on NOCIL
Our recent plant visit to Nocil at Dahej reinforced our conviction on a strong growth outlook, notwithstanding near term demand dip due to weak auto sales. Company’s strong focus on R&D has developed innovative process technologies patented in US, EU and India which has reduced plant operating costs. Demand outlook for rubber chemicals remains strong given ~85% utilization, disruptions in China, and Global and domestic Tyre capex of USD10bn and Rs 250bn over the next few years. Nocil is well placed to capitalize on this demand as completion of Phase 2 expansion will double its capacity (1,10,000 tons by October 2019, ~10% of global capacity) as global Tyre players are eyeing more non-Chinese supplies.
Nocil is confident of maintaining 25% EBIDTA margins in the medium term despite removal of duty protection. Retain Buy with PT of Rs252 based on 15x FY21E PER.
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First Published on Mar 25, 2019 05:18 pm