Neutral NOCIL; target of Rs 170: Motilal Oswal

Motilal Oswal's research report on NOCIL

NOCIL's EBITDA/kg missed our estimate and stood at INR25.1 in 4QFY25, down 19% YoY. Sales volume declined 4% YoY to 13.4tmt. Realization was flat YoY at INR254.2/kg (INR255.1/kg in 4QFY24) amid persistent pricing pressure from Chinese, Korean and EU players. Hence, EBITDA declined 23% YoY to INR335m, while PAT fell 50% YoY to INR204m. There were certain challenges with respect to the product mix in the quarter, with the specialty portfolio contributing 15% to total revenue. Management remains cautious amid ongoing geopolitical uncertainties, particularly in light of intensified pricing pressures from increased dumping by China, Korea, and the EU. Despite this, the Indian tyre industry remains resilient, with a projected CAGR of 4-6%, supported by government infrastructure spending, policy tailwinds, and favorable monsoon forecasts this year. Currently, NOCIL faces no capacity constraints across its product range.

Outlook

The stock is also trading at ~22x FY27E EPS of INR8.5 and ~15x FY27E EV/EBITDA. Our TP of INR170 is premised on 20x FY27E EPS. Reiterate Neutral.

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NOCIL - 19052025 - moti