PCBL shares hit new 52-week highs ahead of Q1 results

Shares of PCBL surged more than 9 per cent during the early trading session on Tuesday, hitting a new 52-week high ahead of the company's results for the quarter ended on June 30, 2023 and other updates. The The company, a part of RP-Sanjiv Goenka Group, is scheduled to announce its earnings for the first quarter of the ongoing financial year today.

"We are pleased to inform you that the first phase, that is, 20,000 MTPA of 40,000 MTPA specialty chemical capacity at Mundra Plant, Gujarat has been commissioned on July 10, 2023," PCBL said in an exchange filing. PCBL has reaffirmed its commitment to strengthening its position as a trusted global player, with critical focus on specialty chemicals, it said in a separate filing.

Shares of PCBL surged over 9 per cent to Rs 178.25 on Tuesday, scaling their new 52-week high, before giving up its gains partially. The company was commanding a total market capitalisation of more than Rs 6,500 crore. The scrip had settled at Rs 163 on Monday.

PCBL, erstwhile known as Phillips Carbon Black, is the leading manufacturer of carbon black, which is used as a reinforcing material in tyres. PCBL was set up in the year 1960 and started production at Durgapur with a production capacity of 14,000 MT per annum.

Carbon black prices were down 2.8 per cent on a quarter-on-quarter (QoQ) basis and 15.2 per cent on a year-on-year (YoY) basis, to Rs 105, against Rs108 in Q4FY23. Export volumes were up 20.6 per cent YoY to 18.8kte. Prices dipped 2.3 per cemt MoM to Rs 105 in April 2023, said ICICI Securities in its report.

ICICI Securities has a buy rating on the PCBL, while another brokerage firm Nuvama Institutional Equities also has a 'buy' rating on PCBL with a target price of Rs 176 apiece, which is already met during the session.

PCBL is a high conviction midcap idea by ICICIDirect. The brokerage firm is positive on the factors such as new greenfield plant commissioned; speciality grade volume to outgrow base grade; margins and RoCE to expand and drive re-rating; and healthy cash-flows of the company.

"We assign BUY rating on PCBL amid healthy volume growth in the offing, increasing share of speciality grade carbon black, consequent rise in margins and return rations, inexpensive valuations and healthy balance sheet, We value PCBL at a conservative 13x P/E on FY25E EPS of Rs 15.4 per share with our consequent target price as Rs 200 over the next 6 months," it added.

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