Buy NOCIL, target price Rs 310: HDFC Securities

HDFC Securities has buy call on NOCIL with a target price of Rs 310. The current market price of NOCIL Ltd. is Rs 239.15. Time period given by analyst is one year when NOCIL Ltd. price can reach defined target.

NOCIL Ltd., incorporated in the year 1961, is a Small Cap company (having a market cap of Rs 3987.78 Crore) operating in Chemicals sector.

NOCIL Ltd. key Products/Revenue Segments include Other Operating Revenue, Duty Drawback and Scrap for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 463.95 Crore, up 19.14 % from last quarter Total Income of Rs 389.40 Crore and up 43.05 % from last year same quarter Total Income of Rs 324.33 Crore. Company reported net profit after tax of Rs 68.92 Crore in latest quarter.

Investment Rationale
The brokerage's BUY recommendation on NOCIL with a TP of INR 310 is premised on (1) ramp-up in capacity utilisation; (2) robust volume growth on the back of pickup in demand in the tyre industry; and (3) expansion of margin with focus on specialised rubber chemicals. Q4 EBITDA/PAT were 135/132% above estimates, owing to 23% higher revenue, lower-than-expected raw material cost courtesy inventory gains, and lower-than-anticipated opex, but were offset by higher-than-expected depreciation and tax outgo.

Promoter/FII Holdings
Promoters held 33.85 per cent stake in the company as of 31-Mar-2022, while FIIs owned 2.54 per cent, DIIs 4.27 per cent.