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Motilal Oswal Report
The prices of Aniline, a key raw material for Nocil Ltd., have shot up by 20% month-on-month in November 2021 (up 44% QoQ and 149% YoY) due to a supply crunch and other reasons mentioned below. This could result in a normalisation of margin for Nocil (recorded a peak margin of Rs 55/kg in the no anti-dumping duty environment in Q1 FY22).
As the price of Aniline increases, the ability of the company to pass through the entire increase subsides, resulting in a margin compression. In the current environment, where:
the centre has not accepted the Directorate General of Trade Remedies’ recommendation to impose anti-dumping duty on one of its key products, PX-13; and
there exists a risk of increased dumping from China (China Sunshine would complete its expansion over the next one to two quarters), the stock may be under pressure in the near term.
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