PCBL Chemical Ltd. share price target

Carbon black is widely used as a model compound for diesel soot for diesel oxidation experiments. Carbon black is mainly used as reinforcing filler in tires and other rubber products. In plastics, paints, and inks carbon...

ICICI Securities Ltd | Retail Equity Research Phillips Carbon Black (PCBL) reported a robust Q2FY17 performance. Net sales for the quarter was at | 460.7 crore, largely tracking robust volume growth of 18% YoY (97000 tonne) amid muted realisations due to a decline in crude price EBITDA in Q2FY17 was at | 58.1 crore with corresponding EBITDA margins at 12.6%. PAT in Q2FY17 was at | 15.2 crore vs. | 5.4 crore in Q2FY16. EBITDA/tonne in Q2FY17 was at | 5986/tonne...

Phillips Carbon Black (PCBL) reported a robust Q1FY17 performance; largely tracking our investment thesis. Net sales for the quarter were at | 430.6 crore, down 10% YoY • EBITDA was at | 53.0 crore with corresponding EBITDA margins at 12.3%. PAT in Q1FY17 was at | 12.0 crore. Carbon black sales volume in Q1FY17 was at 95,500 tonne, which includes domestic sales of 76400 tonne and export sales of 19,100 tonne. Corresponding EBITDA/tonne in Q1FY17 was at | 5548 tonne.

ICICI Securities Limited expect PCB to report PAT of | 45.5 crore in FY17E & | 93 crore in FY18E. We value PCB at | 300, i.e. 11x P/E on FY18E EPS of | 27/share. We have a BUY rating on the stock.

 

Phillips Carbon Black (PCBL) is the manufacturer of carbon black, which is primarily used as a reinforcement material in tyres and other industrial rubber goods. PCBL is the largest manufacturer of carbon black in India with a market share at 31%. With the robust auto sector outlook, a steep correction in crude price (raw material a crude derivative) and operational efficiencies, PCBL is on a strong footing with robust prospects, going forward. With a turnaround in sight, we expect the PAT to quadruple from current levels by FY18E.