NOCIL Limited — Q1 FY26 earnings call

Call held 8 Aug 2025

Management summary

NOCIL reported a subdued Q1 FY26, with flat sequential revenue and margin pressure, primarily due to persistent dumping in the domestic market. While export volumes showed moderate growth, the overall performance was muted. Management is focused on countering import pressure through antidumping petitions, which cover a significant 40% of their business. The company continues to make progress with international customer approvals as part of its China+1 strategy and is advancing its capex plan, though revenue benefits are not expected until H2 FY27.

Highlights

  • Revenue from operations stood at ₹336 crores, a flattish performance on a sequential basis (vs ₹340 crores in Q4 FY25).

  • Operating EBITDA was ₹31 crores, with an EBITDA margin of 9.1%.

  • Profit After Tax (PAT) for the quarter was ₹17 crores, compared to ₹21 crores in Q4 FY25.

  • Sales volumes were stable quarter-on-quarter, indexed at 133 (with Q1 FY20 as a base of 100).

  • The company has filed antidumping petitions for key products, which constitute approximately 40% of the business; investigations have been initiated.

  • Export volume growth was moderate at 3-3.5% in Q1, impacted by a degrowth in latex products due to U.S. tariffs.

  • Current capacity utilization is around 65-67%, providing a runway for growth.

  • The ₹250 crore capex project is 30% complete, with trial production expected in H1 FY27.

Concerns

  • Dumping pressure in the domestic market

Key financials

  1. Revenue from Operations ₹336 Cr -1.2%QoQ
  2. Operating EBITDA ₹31 Cr -8.8%QoQ
  3. EBITDA Margin 9.1%
  4. Profit Before Tax ₹23 Cr -11.5%QoQ
  5. Profit After Tax ₹17 Cr -19.1%QoQ
  6. Capacity Utilization 66%

What they filed

Q1 FY27: revenue up 19.9%, net profit up 64.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue363 318 340 336 321 −12%316 −1%330 −3%403 +20%
EBITDA38 24 34 31 22 −42%27 +13%21 −38%45 +45%
Net profit42 13 21 17 12 −71%9 −31%17 −19%28 +65%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Capex

  • Commissioning of new facility Capex · H1 FY27 · High confidence Trial production to start
    We expect the commission -- trial production to start during H1 FY '26-'27.

    — P. Srinivasan

Revenue

  • Revenue from new facility Revenue · H2 FY27 · High confidence Revenues to kick in
    So, post trials and approvals from the customer, hopefully, sometime in H2 FY '27, we should see the revenues kick in.

    — P. Srinivasan

Other

  • Asset Turnover Ratio Other · Ongoing · Medium confidence 1.8 to 2.2
    Typically, we look at an asset turnover ratio of 1.8 to 2.2 for our rubber chemicals business.

    — P. Srinivasan

Market context

  • Volume Growth Volume · Ongoing · Low confidence Double-digit
    Yes. So, the aspiration and the plans are clearly to look at double-digit volume growth, but it will be difficult to put my finger on to say how much -- where will it be precisely in this calendar year.

    — V. S. Anand

  • Global Rubber Chemical Market Share Market Share · Long-term · Low confidence 10%
    So, I think if you look at our long-term objective of achieving 10% market share in the global rubber chemical space, then in the medium term to long term, we need to do a performance CAGR of 10%, and that's what we should aim for.

    — P. Srinivasan

Risks & concerns

  • Dumping pressure in the domestic market

    high

    Management explicitly stated they continue to experience dumping pressure, which is impacting performance. Their mitigation is filing for antidumping duties.

    Management acknowledged

  • China overcapacity and competition

    medium

    An analyst questioned the threat from significant new capacity in China (MBT). Management stated they are already operating in an excess supply environment and don't see a significant change.

    Analyst downplayed

  • U.S. Tariffs impacting exports

    medium

    Management noted that the latex sector in Southeast Asia is facing uncertainty due to U.S. tariffs, which moderated their overall export growth in Q1.

    Management acknowledged

  • Slowdown in customer approval process

    low

    Management mentioned that the speed of customer approvals is not always the same, which can affect the pace of volume ramp-up with new international clients.

    Management acknowledged

Areas of evasion (2)

  • Quantifying the potential financial impact of a favorable antidumping duty ruling.
  • Providing a specific number for potential savings from the newly commissioned power turbine.

Q&A highlights

2 direct, 1 evasive
Operating Leverage Trigger Point Direct
But I think the real benefit, probably we are looking at somewhere around 160 or thereabout, where the real benefits, which will be visible and significant in the operational performance, subject to the key point caveat, we have the -- pricing parameters doesn't change so drastically, or dumping, it doesn't get more intensified.

Provides a specific volume index target (160 vs current 133) for investors to model when significant margin expansion from operating leverage will occur.

Asked by Nirav Jimudia

Revenue covered by Antidumping Petitions Direct
Yes. All the products which are under an antidumping investigation, we are about 40% of the business -- constitute 40% of the business.

Quantifies the portion of the business that could be directly impacted by a favorable antidumping duty ruling, highlighting a key potential catalyst for the company.

Asked by Nitesh Dhoot

Financial Impact of Antidumping Duty Evasive
I think it's too premature to comment on it because it is under investigation process, and the government will study and make their own calculations and then come out. So I think it's too premature to even quantify any impact effect on that.

While the evasion is understandable given the regulatory process, it shows that management is unwilling to provide even a directional sense of the potential margin or profit uplift, leaving investors to speculate.

Asked by Aditya Khetan

2 min read 6 chapters

Detailed narrative

Q1 FY26 Performance: A Subdued Quarter

NOCIL's Q1 FY26 performance was muted, reflecting a challenging market. Revenue from operations stood at ₹336 crores, down slightly from ₹340 crores in the previous quarter. Profitability also saw a decline, with Operating EBITDA at ₹31 crores (vs. ₹34 crores in Q4) and PAT at ₹17 crores (vs. ₹21 crores in Q4). The EBITDA margin compressed to 9.1%. Management attributed the flattish performance to continued dumping pressure in the domestic market, forcing a 'judicious mix of price and volume play'.

Domestic Market and Antidumping Measures

The primary headwind for NOCIL remains the intense import pressure in the domestic market. To counter this, the company has filed antidumping petitions for some of its key products. Management confirmed that the government has found merit in the petitions and initiated detailed investigations. Crucially, the products under this investigation constitute a significant portion, approximately 40%, of the company's total business, making the outcome of these proceedings a key catalyst to watch.

Export Growth and Customer Development

On a positive note, the export business continues to show growth, albeit at a moderate pace of 3.0-3.5% in Q1. This growth was tempered by a degrowth in latex-related products, which were impacted by U.S. tariffs. The company is making steady progress on its China+1 strategy, securing incremental approvals from long-standing international customers. Management confirmed that they have started supplying to Japanese tire companies, with products and sites at various stages of commercialization.

Capex Update and Capacity Utilization

The company's major capex project of ₹250 crores is progressing, with about 30% of the budget expended as of March 2025. The timeline for this expansion is now clearer, with trial production expected to commence in H1 FY27 and revenues kicking in from H2 FY27. With current overall capacity utilization at 65-67%, NOCIL has an adequate runway to grow volumes with existing facilities until the new capacity comes online.

Cost Structure and Operating Leverage

Management addressed the higher conversion costs in Q1, attributing them to two main factors: a 15-20% increase in production activity (building inventory) and the front-loading of about 60% of the annual CSR expenses into the first quarter. Looking ahead, a key data point for investors was provided regarding operating leverage. Management indicated that significant, visible benefits to operational performance would start kicking in once the sales volume index reaches 'somewhere around 160 or thereabout', a notable step-up from the current level of 133.

Industry Outlook

Management expects the Indian tire industry to grow in the mid-single digits for the ongoing year, supported by healthy replacement demand and infrastructure spending. The domestic auto component industry is also expected to grow, though at a lower level than the previous year. The company remains watchful of the developing U.S. tariff scenario, which could have a bearing on these end-user sectors.

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