PCBL Chemical Ltd. share price target

Company has total installed capacity of 678,000 MTPA of Rubber Black and 92,000 MTPA of Specialty Black which is set to cross total 1,000,000 MTPA by FY27 (increase of ~30%) spread across 5 locations in India.
Blended margins (EBITDA / MT) has been increasing Y-o-Y on account of increase in exports as well as product mix (performance and specialty chemicals).

PCBL’s Q1FY25 volume growth accelerated with new capacity addition alongside spreads remaining favourable. The company expects volumes to grow at a CAGR of 11–12% p.a. over the next five years.

Business diversification & industry tailwinds to propel growth

PCBL’s volume growth has accelerated with new capacity addition and higher contribution from specialty grade. Despite spot volumes sales from its Chennai facility, PCBL was able to maintain gross profit/kg. Going forward, it expects spreads to improve by INR 1/kg.

PCBL witnessed healthy Q1FY24 volume growth of 12.5% YoY in carbon black driven by 22.6% rise in export volumes, which indicates that the strong overseas market opportunity is playing out.

Though PCBL witnessed 6% YoY growth in its carbon black volumes in Q4FY23, destocking remained a pain. For FY24, the company expects carbon black volume growth of ~15% driven by restocking and ramp-up at the Chennai facility, and 25% volume growth in specialty.