PCBL Chemical shares tank 11% despite strong Q1 FY27 print; here's what brokerages say

Shares of PCBL Chemical Ltd fell sharply in Thursday's trade even as the company reported a strong set of June quarter earnings. The stock slumped 10.95 per cent to hit a day low of Rs 325.80.

Select brokerages noted that the company's Q1 FY27 performance benefited from non-recurring inventory gains of around Rs 70 crore.

"Despite a likely hiccup expected in Q2, it retained its EBITDA/kg growth guidance of 14-15 per cent for FY27 as it continues to focus on margins over volumes. Domestic demand remains secular and PCBL expects Europe and the US (premium markets) to account for a higher share of volumes. We suspect near-term volatility from falling crude prices which could trigger destocking and some inventory losses in Q2," ICICI Securities stated.

"Meanwhile, Aquapharm's recovery is gradual but showing steady improvements. PCBL's capex for coal tar distillation (for feedstock diversification) and battery chemical progress remains on track, with encouraging customer qualifications," the brokerage added.

ICICI Securities retained its 'Reduce' rating on the stock while raising its 12-month target price.

"We raise FY27/28E EBITDA by 19 per cent/1.6 per cent and TP to Rs 315 (vs. Rs 270), as we raise the P/E multiple to 20x (vs. 18x). Maintain REDUCE," it stated.

Nuvama Institutional Equities also said inventory gains partly aided the company's operating performance.

"PCBL reported a strong EBITDA beat in Q1 FY27, partly driven by inventory gains; adjusting for these, EBITDA increased 8.3 per cent YoY to Rs 340 crore. Top line expanded 17 per cent YoY, led by higher realisations in the carbon black and power businesses while Aquapharm continued to deliver a subdued performance. Reported PAT soared 64.6 per cent YoY," the brokerage said.

On Aquapharm, Nuvama said, "Aquapharm continued to underperform with EBITDA down 6 per cent YoY to Rs 4.7 crore, well below the exit-quarter guidance of Rs 7.5 crore, as higher raw material and logistics costs more than offset temporary surcharges."

The brokerage added that the long-term outlook for the business remained constructive.

"The long-term outlook remains positive, supported by growth in water treatment, green chelates and geographic expansion although the business continues to lag the anticipated ramp-up," Nuvama said.

It kept a 'Hold' rating on the counter with a revised target price of Rs 350.