Sharekhan's research report on NOCIL
Q4FY22 PAT of Rs. 69 crore, up 85% y-o-y was sharply above our/street estimated led by beat in EBITDA margin, better-than-expected volumes partially offset by higher depreciation cost and tax rate. Strong margin performance with 120% q-o-q increase in EBITDA/kg to Rs. 81/kg primarily led by price hike, better product mix (given high share of high value products) and benefit of operating leverage (utilisation rate of 75%). The management has maintained its guidance to reach optimum utilisation on expanded capacity by September 2023 and hinted for further capacity expansion through bottlenecking.
Outlook
Recent sharp correction in NOCIL’s stock price provides an investment opportunity as valuation of 16x FY24E EPS makes risk-reward favourable as market share gain would help PAT rise 1.5x over FY22-24E. Hence, we maintain a Buy on NOCIL with an unchanged PT of Rs. 348.
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