PCBL shares set for up to 75% rally after 3x return in three years, brokerages suggest

PCBL, which announced its quarterly earnings on Monday, has surprised investors with a strong performance in the quarter ended on March 31, 2023. The company reported a strong operating performance, which boosted its bottom line and strong future outlook and analysts are now expecting an upside of 75 per cent in the stock from current levels of Rs 130.

PCBL registered a 13 per cent rise in standalone net profit on a year-on-year (YoY) basis at Rs 102 crore for the quarter ended March 31 against Rs 90 crore in the same period last year. Revenue from operations on a standalone basis increased 13 per cent to Rs 1,374 crore.

EBITDA for the March 2023 quarter stood at Rs 200.45 crore, up 36.84 per cent from Rs. 146.48 crore in March 2022. For the year ended March 31, 2023, the company’s net profit increased four per cent to Rs 444 crore against Rs 427 crore last year.

Shares of PCBL were trading mostly flat on Tuesday and the company was commanding a market capitalization of little less than Rs 5,000 crore. The stock is slightly down in the year 2023 so far, but it has jumped about 22 per cent in the last one year. The stock has gained more than 335 per cent from its covid lows.

Brokerage firms continue to remain positive on PCBL, formerly known as Phillips Carbon Black which is a part of RP Sanjiv Goenka Group. Its products are used in a number of industries including tyres, specialty chemicals, wires & cables, inks & coating, films and more. A majority of them have suggested buying the counter.

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

"PCBL is excited about exports, particularly to the US and Europe where the demand-supply scenario is becoming favourable, with restrictions on Russia supplies giving the company an advantage. PCBL has now guided for carbon black volume growth of 12-13 per cent over the next five years, which is significantly positive," it said.

The company expects spreads to start improving again, FY25 onward. It is very close to completing product development in conductive grade and should benefit from its use in EVs, it added along with a revised target price of Rs 180, from Rs 155 earlier with a buy rating. ICICI Securities cited a rise in competitive intensity and lower-than-expected spreads in India as key risks.

PCBL reported net revenue at Rs 1,370 crore with 12.7 per cent YoY growth driven by 6 per cent growth in volumes. Specialty volumes were at an all-time quarterly high at 11k tonnes. EBITDA per tonne for the quarter improved to Rs 15,417 due to improvements in product mix, better yields and operational efficiency, said B&K Securities.

"Profit for the quarter increased by 15.9 per cent YoY at Rs 100 crore due to high operating profits. Promoter holding remained flat at 51.4 per cent for 4QFY23 while pledged shares were Nil. We maintain a Buy rating on the stock with a revised target price of Rs 228 versus earlier target price of Rs 238 due to tweak in tax rates," it said, suggesting an upside of 75 per cent.


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