Sharekhan's research report on NOCIL
Q1FY2024 results were decent with a 7% beat in PAT at Rs. 34 crore (up 21% q-o-q), led by better-than-expected EBITDA per kg, while volumes were below our estimates. Sales volumes declined by 2% q-o-q to 13,433 tonne, reflecting a decline in the export market; EBITDA margin of Rs. 41/kg (up 14% q-o-q) was above our estimate mainly due to beat in gross margins. Q1 volume growth in the domestic market was completely offset by the decline in overseas volume. Higher supply from China is also putting pressure on pricing; however, management expects the pressure to ease once the Chinese economy picks up.
Outlook
Near-term demand challenges persist, but same is reflected in the valuation of 16.6x FY2025E EPS. Management’s focus on doubling its global market share would drive the company’s long-term growth. Hence, we maintain our Buy rating on NOCIL with an unchanged price target (PT) of Rs. 260.
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