Nocil Q2 Review — High-Cost Inventory Reduces Margins: Motilal Oswal
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Motilal Oswal Report
Nocil Ltd. reported a miss on our Ebitda estimate (at Rs 36/kg, down 32% QoQ), despite improved realisation (to Rs 274/kg, up 5% QoQ), on the back of higher raw material costs during the quarter. Volumes grew 4% QoQ to 13.7 kilo metric tonne.
The management guided that Nocil would continue to focus on growing its volumes, which it has done successfully thus far.
Volumes sold are expected to increase 10% YoY – with revenue growth of 45% YoY, at minimum, expected in FY22.
The guidance is lower than our forecast of up 70% YoY in revenue for FY22E; thus, we revise down our FY22 earnings per share by 34%, factoring in the miss during Q2 FY22.
The central government has not accepted the Directorate General of Trade Remedies’ recommendation to impose anti-dumping duty on one of its key products, PX-13.
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