Hold NOCIL Ltd for the Target Rs 140 by Prabhudas Liladhar Ltd
Higher realizations offset volume weakness
NOCIL reported revenue of INR4.3bn (PLe: INR3.6bn; Consensus: INR3.9bn), up 33% YoY and 6% QoQ, primarily driven by higher realizations, while volumes declined 3% YoY and 7% QoQ due to temporary supply side constraints and logistical disruptions arising from geopolitical uncertainties. Domestic and export volumes registered singledigit growth in H1FY27. Management expects the disrupted volumes to recover in H2FY27 and remains confident of achieving 10% volume growth for FY27. Looking ahead, the INR1.3bn Dahej expansion is progressing as planned, while the TDQ project is awaiting customer approvals, with capitalization expected in Q3FY27 and commercial ramp-up thereafter
Management has reiterated its FY27 revenue guidance of INR14–16bn, with confidence of achieving the upper end of the range and EBITDA margins of ~10%. However, higher coal, gas and freight costs, continued import competition and potential demand moderation amid a weaker monsoon and inflationary pressures remain key concerns. Anti-dumping duty on sulfonamides contributed to Q2 pricing and margins, but not significantly. We continue to remain cautious on the medium-term earnings outlook. The stock is currently trading at ~19x FY29E EPS. We value the company at 21x Sep’28E EPS and maintain our 'Hold' rating with a target price of INR140.
Volumes dgrew by 7% QoQ: Consolidated revenue stood at INR4.3bn,33.2% YoY/5.9% QoQ (PLe: INR3.6bn, Consensus: INR3.9bn). H1FY27 revenue was at Rs8.3bn and increased by 26.4%. Gross profit margin was at 38.5% (vs 41.2% in Q2FY26 and 43.4% in Q1FY27), the QoQ declined by 490bps and 270bps YoY due to increase in raw material cost. Volume decreased by 3% YoY and 7% QoQ.
EBITDAM margin expanded by 140bps YoY:
EBITDA increased 61.1% YoY but declined - 20% QoQ to INR360mn (PLe: INR337mn, Consensus: INR402mn). EBITDAM stood at 8.4% (PLe: 9.4 %) as against a margin of 7% in Q2FY26 and 11.2% in Q1FY27. H1FY27 EBITDA increased by 53.3%. Reported PAT stood at INR240mn, increasing by 98.1% YoY but declining by 13% QoQ. PAT margin stood at 6%, compared with 4% in Q2FY26 and 7% in Q1FY27.
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SEBI Registration number is INH000000933
