Buy Phillips Carbon; target of Rs 207: SKP Securities

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Buy Phillips Carbon; target of Rs 207: SKP Securities

SKP Securities is bullish on Phillips Carbon and has recommended buy rating on the stock with a target of Rs 207 in its May 26 2011 research report.

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SKP Securities is bullish on Phillips Carbon and has recommended buy rating on the stock with a target of Rs 207 in its May 26 2011 research report.

"Philips Carbon Black (PCBL), a member of RP Goenka Group was incorporated on March 30, 1960 and is a leading manufacturer of various grades of carbon black in India. Columbian Chemical Corporation, US, a leading international producer of rubber blacks is the Technical Collaborator of the company."

"Top line records 22.30% and 37.10% growth for the quarter and financial year respectively due to increase in capacity utilization and higher off take in domestic markets. PAT was however down by 8.20% and 5.20% respectively for the quarter and financial year respectively on account of substantial increase in the raw material prices specially Carbon Black Feed Stock which is linked to the international crude oil prices and a higher tax outgo. The expansion of carbon black facility at Mundra by 50,000 MT is complete and is expected to commence operations soon. The 10MW co generation power unit at Cochin has also commenced operation from April 2011. • On the Vietnam JV, all approvals have been received for commencement of construction work. Land acquisition has been complete. The project will have a capacity of 55,000 MT along with a 13MW CPP, to be built at a cost of US$63 million. Work is expected to commence from May 2011 and the financial closure is expected in June 2011."

"We are revising our target price from Rs 254 in our report dated 6th Dec, 2010 to Rs 207 implying 53% rise in current levels to be achieved in a period of 15 months. We have used the DCF method by taking a WACC of 12.38% from FY12E to FY16E and a terminal growth rate of 5% thereafter," says SKP Securities research report. 

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