Market Cap.: ₹ 1,216.24 Cr.
Current Price: ₹ 74.35
Book Value: ₹ 34.39
Stock P/E: 11.96
Dividend Yield: 1.59%
Face Value: ₹ 10.00
Price wise this looks better than Oriental Carbon but sales are not increasing . I don’t know a lot about rubber industry
Company has reduced debt.
Company is virtually debt free.
Company has been maintaining a healthy dividend payout of 28.47%
The company has delivered a poor growth of 9.57% over past five years.
Company has a low return on equity of 13.36% for last 3 years.
Promoters have pledged 28.54% of their holding
Net Profit 117.17
Oil is crude material I don’t believe in oil price
Profit growth is good though increasing a lot 15-20%
looks cheap at current price
has a little cash crunch but that is because it has decreased debt loan repayment
competition with chinese market
China is dumping cheap rubber .. benefits from rubber import tax but the regulation can effect the business
Check whether oriental carbon also suffer from same worry ..
The demand for Rubber Chemicals is a derived demand and is directly a function of Global Rubber Consumption, which for the year remained relatively flat. The weakness in the price of crude oil had a favourable impact on the raw material costs. However, these reductions in costs were accompanied by reductions in selling prices of finished goods. NOCIL adjusts selling prices to regular customers to reflect these reductions in costs. The reasons for improvement in bottom line are:
1. Supply Side Advantage: The supply side advantage is driven from propriety technology and geographical location which may give business access to raw material at lower cost. NOCIL doesn’t seem to have access to any propriety technology to manufacture its products at large. NOCIL, however, is investing in technology & R&D which may give it superiority in specialised products. It doesn’t have a geographical presence to access cheaper raw material.
2. Local Economies of Scale: NOCIL has annual capacity of 55,000 tonnes & is India’s largest rubber chemical manufacturer. It has undertaken an expansion plan involving intermediates for its main product range at Dahej. Dahej began its commercial operation in March 2013. Th current capacity utilization is ~80%. NOCIL seem to have slight advantage on local economies of scale with large capacity already in place. The future expansion will require lower Capex as the common infrastructure is already in place.
3. Demand Side Advantages: NOCIL has established brands across the product suite which allows its clients to get access to all their requirements at one place. However, the switching cost for client is low. Tyre industry forms major client base for NOCIL; these tyre companies are under stress due to low demand. In such a scenario they could try to safeguard their margins by sourcing rubber chemical from cheaper supplier.
NOCIL is a leading company in a highly competitive industry with low switching costs for the clients. The fortunes of the company are linked to anti-dumping relief by government and continuous focus on R&D to develop specialised products.
Aha moments: Less P/E, Market leader in India
Bad: Out of circle of competency, sale are not growing right now, Oil is raw material.
Final VerdictMay be an average bet.