Nocil Reports 58% Drop in Q2 Net Profit Amid Revenue Decline

NOCIL , a prominent player in the Indian chemical industry, has reported a significant decline in its financial performance for the second quarter. The company's latest financial results reveal a sharp drop in net profit and a contraction in revenue, reflecting challenging market conditions.

Financial Highlights

Metric	Q2 (Current Year)	Q2 (Previous Year)	Year-over-Year Change
Net Profit	₹173.00 million	₹415.00 million	-58.3%
Revenue	₹3.20 billion	₹3.60 billion	-11.1%
EBITDA	₹204.00 million	₹365.00 million	-44.1%
EBITDA Margin	6.36%	10.06%	-370 bps

NOCIL's financial results for the second quarter show a substantial decline across key metrics:

Net Profit

The company's net profit decreased by 58.3% year-over-year, falling to ₹173.00 million from ₹415.00 million in the same quarter of the previous year.

Revenue

Revenue for the quarter stood at ₹3.20 billion, down from ₹3.60 billion in the corresponding period last year, marking an 11.1% decline.

EBITDA and Margins

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) experienced a significant drop, decreasing to ₹204.00 million from ₹365.00 million in the previous year's second quarter. This represents a 44.1% reduction in EBITDA.

The EBITDA margin also contracted, falling to 6.36% from 10.06% in the same period last year, indicating a decrease of 370 basis points.

These results suggest that NOCIL is facing headwinds in its operating environment. The substantial decline in profitability, despite a less severe drop in revenue, points to challenges in maintaining operational efficiency or managing costs effectively during the quarter.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-0.04%	-5.04%	-5.03%	-4.63%	-37.91%	+22.76%

NOCIL Limited , a leading manufacturer of rubber chemicals in India, is pushing forward with its capacity-led growth strategy, focusing on specialty rubber chemicals and exports amidst a challenging market environment. The company's latest financial results and strategic initiatives reflect its efforts to position itself for future growth while navigating current market pressures.

Financial Performance

For the quarter ended September 30, NOCIL reported consolidated revenue from operations of ₹320.56 crore, compared to ₹362.70 crore in the same quarter of the previous year. The company's profit after tax for Q2 stood at ₹12.12 crore, down from ₹42.13 crore in Q2 of the previous fiscal year.

Strategic Focus

NOCIL is strategically positioning itself for growth through:

Capacity Expansion: The company is investing in expanding its production capabilities, particularly in specialty rubber chemicals.
Export Focus: NOCIL aims to capitalize on global supply rebalancing, with a strong emphasis on increasing its export market share.
Margin Stability: Despite pricing pressures, the company is working on maintaining margin stability through operational efficiencies.

Market Dynamics

The rubber chemicals market faces several challenges:

Domestic Market Pressure: NOCIL reported continued dumping pressure in the domestic market, leading to pricing challenges.
Global Uncertainties: International markets, particularly the US, have been impacted by tariff issues and global economic uncertainties.
Demand Revival: The company is positioning itself to benefit from an anticipated demand revival in the tyres and performance materials sectors.

Volume Growth

Despite market challenges, NOCIL has shown resilience in its volume performance:

Metric	Q2	Q1	Q-o-Q Change
Volume	138	133	4%

The company reported a 4% quarter-on-quarter growth in volume, with domestic volumes showing positive trends.

Operational Highlights

Brownfield Expansion: NOCIL has announced a capex program of ₹250 crore at its Dahej facility, which is on track and will enhance production capabilities of its TDQ antioxidant product portfolio.
Product Mix Strategy: The company continues to employ a judicious mix of price and volume strategy to navigate the challenging market conditions.
Financial Prudence: As of September 30, NOCIL maintained a strong balance sheet with cash and investments of ₹297.98 crore.

Future Outlook

NOCIL's strategy is aligned with the global 'China +1' trend, positioning the company as a dependable, non-Chinese player in the rubber chemicals industry. The company aims to double its market share by leveraging its existing product portfolio and tapping into growth opportunities in Asia, Europe, and the US.

While near-term challenges persist, NOCIL's focus on capacity expansion, specialty chemicals, and export markets underscores its commitment to long-term growth and sustainability in the rubber chemicals sector.

As the company navigates through the current market dynamics, investors and industry observers will be watching closely to see how NOCIL's strategic initiatives translate into financial performance in the coming quarters.