Target: ₹267

CMP: ₹218.55

Our Buy recommendation on NOCIL with a TP of INR 267 is premised on: a ramp-up in capacity utilisation; and expansion of margin with a focus on specialised rubber chemicals. Q1 EBITDA/PAT were 10/5 per cent below our estimates, owing to an 8 per cent fall in revenue, higher-than-expected other expenses, higher-than-expected tax outgo, offset by lower-than-expected raw material cost and higher-than-expected other income.

Revenue remained flattish sequentially at ₹400 crore. Volumes fell by 2 per cent sequentially, offset by realisations that grew by 2 per cent sequentially in the quarter. Export volumes slowed down owing to the global recessionary trends.

The domestic market continues to be robust, whereas the export market is showing pain. Asian and American markets are continuing to hold strong demand, whereas the European market is witnessing weak demand.The company’s plants operated at an average capacity utilisation of 65 per cent in Q1. Exports formed 31% of the total revenue in Q1. (4) Speciality volumes contribute about 25 per cent to the total volumes of the company.

We cut our FY24/25 EPS estimates by 8.2/8.9 per cent to ₹9/12.4 to factor in the subdued export demand .