Home / Markets / Stock Markets /  Top pick: Axis Securities suggests this chemical stock to buy this week

The OEM manufactures are clocking highest ever volume figures in domestic market which is instigating demand for new tyres in both PV and commercial vehicles and the domestic tyre industry is also witnessing strong replacement demand, said brokerage and research firm Axis Securities. 

“This demand has led to highest ever consumption of rubber (natural & synthetic) globally to 29.7 MMT. This translates to increase in demand for rubber chemicals produced by the company which usually account for 3.5% of total rubber consumption," the note stated.

NOCIL has a shift in product mix with increasing tilt towards specialty chemicals (25% of total Q1FY23 revenues) and increase in Exports share to 36% of total revenues. This will improve companies margin profile, highlighted Axis Securities.

Sharing as its top stock pick of the week, the brokerage house has recommend a Buy rating on Nocil shares with a near term target price of 275. The chemical stock is up about 12% in 2022 (YTD) so far.

“Coupled with increasing levels of specialty chemicals a favorable movement in prices for passing increasing raw material costs with a three month lag and increased volume levels on absolute basis , we expect the operational leverage to kick in and improve the return ratios in coming quarter," it added.

NOCIL Ltd is engaged in manufacturing of rubber chemicals which are used by the tyre industry and other rubber processing industries. Company is the Largest Rubber Chemicals Manufacturer in India with the State of the Art Technology for the manufacture of rubber chemicals.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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