NOCIL Limited - Undervalued

(Sarabjeet Singh) #86

Info from a major Chinese Competitor ( Sunsine)

Source : Last quarter result PPT
Waiting for current quarter results for them, as amount of details provided are very good.

Major Raw Materials:

  • Margins (NPM) are much better as compared to NOCIL. Though they havent provided breakup of Labour costs. However one of the major contributors is Tax incentives from Chinese Govt. They have provided them with only 15 % tax till Dec-2019. Nocil pays around 33 %.

  • With such incentives they can easily compete in India even with ADD in place

  • Decent Capacity Additions:

  • Available at much cheaper valuation
    PE PB P/S
    Sunsine 4.32 1.26 0.80
    Nocil 15.51 2.55 2.76

Why will FII prefer NOCIL over Sunsine ? (food for thought)

  • Nice stock price correlation between the two competitors:

Disc : Invested and Nocil is one of the highest allocation in my PF.

(Sarabjeet Singh) #87

Current Quarter presentation is out for China Sunsine and here is the info of our interest

  1. Average selling price reduced somewhat QoQ , but they say it has stabilized now

  1. Raw material trend:

  1. World Tyre production trend


  1. Some of investor concerns have been answered:

Similar response on above query was there in Nocil’s last conf call as well. Tyre manufacturers take over 1 year to approve any new supplier after extensive testing.