NOCIL (Share Price - Rs.182)(NOCIL): Potential Buy
Valuation: Undervalued stock with PE of 12.75x.
Reasons to Consider: Stock is still undervalued and has great potential as far as valuation and business model is concerned. Optimum utilisation of new plant helped in enhancing earnings.
Drivers: Looking at the numbers, 60 65% of the global consumption of rubber is by automotive tyres, with the rest used in - footwear production, latex products, cycle tyres and tubes, and OTR tyres among others. It supplies all domestic tyre manufacturers in addition to several international tyre companies and has around 3,200 clients in the non-tyre segment.
Financial: In FY17 company had delivered strong growth in term of earnings whereas net income surged by 54%. Q1FY18 was remarkable too with the rise of 46% in the net earnings. The company has managed to reduce debt from Rs.150 crore in FY15 to Rs.19 crore in FY17.
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