Wednesday, April 26, 2006

National Organic Chemical Industries Limited

or NOCIL for short. NOCIL is a turnaround story ... refered to BIFR in Jan-2004, it came out of bankruptcy with a positive net worth on 31st March 2005. The company had a fantastic 3rd quarter with an impressive 23 crs of profits on a capital base of 160.79 crs. Over the last 9 months, the company has notched up 59.50 crs of profits and should close at around 80 crs for the yr. The fwdPE of the stock would be a comfortable 5.63 - an alice in wonderland situation !!!

And although the company doesn't provide for any dividend, I take comfort over the fact that NOCIL has an NCAV of 4.07 and a book value of 10.90 (as compared to a CMP of 28.25). The high court has approved of a demerger of the company in two divisions to which the shareholders will benefit as the rubber division will take advantage of an independent management.

Peers of NOCIL would be other petrochemical companies like Castrol, Manali Petro, Narama Chematur, Hind Flourocarbons, Sah Petroleum, SA Petrochem, Lanxess ABS, Chemplast Sanma, Jubilant Org, DCW, IPCL and Finolex ... (barring Sah whose profits are almost non-consequential, NOCIL and Narmada Chematur exhibit the best improvements in qtrly earnings ... Narmada Chematur has also been recommended for a buy in a previous blog).

I would place a BUY on NOCIL with a stop loss on 24 rupees.

8 Comments:

Blogger Rohit said...

Shankar...
What is your opinion on Manali Petro.....After declaring dividend after many quarters...and also what do you think about they reducing share value to Rs 7.50 and then splitting them again to Rs 5 and giving 3 Rs 5 FV shares for 2 Rs 7.50 FV shares held.....

7:32 AM  
Blogger Shankar said...

Hi Rohit,

I like Manali Petro aswell. It's expected to close at 35 cr for this yr (at a per share FV of INR 10). Although I dont expect any plausible advantages to shareholder value on reducing the share value and splitting ... in toto, the co's at a fwdPE of 6.39. It's only that I preferred NOCIL to Manali due to the lower PE, higher debt recap ratio and more profits.

Manali Petro also has a brilliant debt recap of 100 crs which is 45% of current mkt cap.

Wrm Rgds,
Shankar

9:44 AM  
Blogger Amol said...

Shankar,
I think the profit for 9 months is 49 crores and not 59 crores. It should close above 70 crores with an EPS of around 4.5
With a CMP of 29 it should have a p/e of ~6.5.
I am interested in this script. Will go through further. Thanks.
-Amol.

2:00 PM  
Blogger Shankar said...

Hi Amol, the pdf file uploaded in NOCIL's website as results for qtr ending Dec-05 reads: 59.5 crs.

Infact I had also written it as 49 crs before yesterday. I think we've been seeing the same data.

The stock is up 3.5% today !!!

Warm Rgds,
Shankar

2:39 PM  
Blogger Amol said...

Shankar,
Did you buy NOCIL. If yes, what price have you entered it ?
-Amol.

2:33 PM  
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