OEMs are holding record highs in the domestic market which is fueling demand for new tires in PV and commercial vehicles and the domestic tire industry is also witnessing strong replacement demand, said brokerage and research firm Axis Securities.

“This demand has resulted in the highest consumption of rubber (natural & synthetic) worldwide to 29.7 MMT. This means an increase in the demand for rubber chemicals produced by the company which normally accounts for 3.5% of the total rubber consumption,” the note said. it said.

NOCIL has a change in product mix with an increasing trend towards specialty chemicals (25% of total revenue for Q1FY23) and an increase in Sales share to 36% of total revenue. This will improve the margin profile of the company, highlighted Axis Securities.

Participating as its top stock pick for the week, the brokerage firm has recommended a Buy rating on Nocil’s stock with a near-term price target. 275. The chemical stock is up about 12% in 2022 (YTD) so far.

“With the increase in the levels of specialty chemicals and good price movements to pass the increase in the costs of raw materials with a delay of three months and the rates of increase in the rates on a completely basic basis, we expect the performance improvement to start and improve the return ratio in the next quarter, ” it added.

NOCIL Ltd is engaged in the manufacture of rubber chemicals that are used by the tire industry and other rubber processing industries. The Company is the Largest Manufacturer of Rubber Chemicals in India with State of the Art Technology for the manufacture of rubber chemicals.

The opinions and recommendations given above are those of individual analysts or brokerage firms, and not of Mint.

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