Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NOCIL Ltd (BOM:500730, Financial) reported a year-on-year volume growth of 11% for Q2 FY25, indicating strong demand despite logistical challenges.
- The company has seen continued momentum in international business growth, with double-digit growth in export volumes.
- NOCIL Ltd is making progress in its chemicals expansion program, aligning with strategic growth objectives.
- The company is focusing on improving operational efficiencies and eco-friendly practices, including energy-efficient production methods.
- NOCIL Ltd is actively working on new product developments, focusing on higher-margin products and specialized applications.
Negative Points
- NOCIL Ltd faced a marginal decline in revenue from operations in Q2 FY25 compared to the previous quarter, impacted by logistical challenges.
- Aggressive pricing actions and product dumping by competitors from China, Korea, and the EU have put significant pressure on prices.
- Operating EBITDA margins were impacted due to increased production activity and higher operating costs.
- The company is facing intense competition, particularly in the domestic market, affecting pricing and margins.
- There is a temporary slowdown in compounding production due to high natural rubber prices, affecting the tire industry.
Q & A Highlights
Q: What would have been the sequential growth in volumes if there were no logistics issues?
A: Anand V. S., Managing Director, Executive Director: It would have marginally been higher than the previous quarter.
Q: Are the logistics challenges resolved, and what is the volume growth outlook for H2 FY25?
A: Anand V. S., Managing Director, Executive Director: We expect improvement in volumes in the second half, maintaining a positive trajectory.
Q: How is the competition from China, Korea, and EU affecting pricing and volumes?
A: Anand V. S., Managing Director, Executive Director: Competitors often start with cost-plus pricing but adjust based on market conditions, putting pressure on prices. We balance long-term contracts and spot pricing to manage this.
Q: Is there a recovery in the latex side of the business?
A: Anand V. S., Managing Director, Executive Director: Yes, there is an improvement in rubber glove production and exports from ASEAN, indicating a market uptick.
Q: What is the current capacity utilization, and what is the guidance for FY25?
A: Anand V. S., Managing Director, Executive Director: Current capacity utilization is 70%. We aim for sequential volume growth quarter over quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
