Buy Phillips Carbon; target of Rs 175: Sunidhi Securities

3286 Investors following Phillips Carbon. Share this News with them.

0

Like this story, share it with millions of investors on M3

Buy Phillips Carbon; target of Rs 175: Sunidhi Securities

Sunidhi Securities is bullish on Phillips Carbon and has recommended buy rating on the stock with a target of Rs 175 in its June 27, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Hold Dish TV; target of Rs 88: KRChoksey Hold Hindalco; target of Rs 193: Sushil Finance Hold Dr Reddys Labs; target of Rs 1567: PINC Research ALSO READ See previous views by Sunidhi Securities See what other Experts & Brokerages are saying about Phillips Carbon See messages about Phillips Carbon Phillips Carbon BSE | NSE 31/05/12 Are Mutual Funds betting on Phillips Carbon?

Sunidhi Securities is bullish on Phillips Carbon and has recommended buy rating on the stock with a target of Rs 175 in its June 27, 2011 research report.

"Phillips Carbon Black (PCBL) is engaged in manufacturing and supplier of carbon black catering to the needs of elastomer, tyre, plastic, paints and ink manufacturing industries. It operates in two business segments: carbon black and power.  Post the recent commissioning of the 50,000 tpa capacity at Mundra, the company's current installed capacity of carbon black stands at 4, 10,000 tpa. PCBL has now four manufacturing units located in Durgapur, Cochin (Southern India) and Baroda and Mundra (Western India). PCBL's Durgapur unit has now production capacity of 1, 35,000 tpa with a proven capability to produce 24 grades of carbon black."

"PCBL currently has in place 70.5 MW of power generating capacity of which, 10 MW power unit at Cochin commenced operation from April 2011. With the 8 MW CPP plant at Mundra expected to be commissioned by the end of FY2012, the total capacity will rise to 78.5 MW by 3QFY2012.  PCBL's 80% JV is setting up Vietnam's first carbon black plant of 1, 00,000 tpa and Co-generation power plant of 16 MW in phases through its joint venture in two phases. The carbon black manufacturing capacity in the first phase will be 60,000 tpa and cogeneration power plant will be 12 MW at a total outlay of US$ 63 million, which is expected to be commissioned within 24 months of receipt of statutory clearance."

"PCBL also plans to set up a new manufacturing unit near Ennore in Tamil Nadu at an estimated cost o `500 crore. It will be the company's largest unit in the country with an annual capacity of 1, 40,000 tonnes. The project will require 60 acres and will also include a co-generation facility. The State Industries Promotion Corporation of Tamil Nadu (SIPCOT) is in the process of allotting land for the project."

"During Q4FY11, net profit fell by 8% to `33.3 crore on 22% higher sales of `443.3 crore (YoY). OPM & NPM stood 14.5% and 7.5% respectively against 15.3% and 10.0% in Q4FY10. During FY11, net profit fell by 5% to `116.3 crore on 37 per cent higher sales of `1690.1 crore. A dividend of 50% (`5 per share) has been proposed for FY11. PAT for FY11 declined although marginally mainly due to the strengthening crude oil prices and resulting volatility in price of carbon black feedstock (CBFS), which hit the margins.  PCBL will ultimately pass the price increase costs on to the end-users."

"Since PCBL utilises the off-gas generated during the manufacture of carbon black for producing power, the company has no raw-material requirements. Hence, although power revenue would contribute a mere ~6-7% to the company's top line in FY2012E, on the bottom-line front it would contribute over ~40-45% of total profit. Thus, a high proportion of power revenue would percolate to the bottom line and lend visibility to the company's earnings while significantly de-risking its business model. The Mundra plant revenue would have started accruing from Q1FY11. Efforts are on compensate part of the cost-push through better utilization of the co-generation facilities using the tail gas for generation of electricity. At CMP of Rs 135, the share is trading at a P/E of 3.2x on FY12E and 2.8x on FY13E. We recommend BUY on the stock with a price target of Rs 175 in the medium term," says Sunidhi Securities research report.

FIIs holding more than 30% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment