Hold PCBL: target of Rs 375: ICICI Securities

ICICI Securities's research report on PCBL

PCBL’s Q1FY25 volume growth accelerated with new capacity addition alongside spreads remaining favourable. The company expects volumes to grow at a CAGR of 11–12% p.a. over the next five years; and plans for large capex to capture the opportunity. It also anticipates EBITDA/kg to enhance by INR 4-5/kg in 4–5 years on better product mix and efficiency gains. Aquapharm also plans to grow revenue by 15–20% p.a. over the next few years, as it expands market share in phosphonates in conjunction with a sharp rise in capacities in green chelates and other products. PCBL expects to increase net profit to INR 25bn (5x) in next five years; which is ambitious, in our view.

Outlook

We cut our FY25E EPS by 1.5%, but raise FY26E EPS by 19%, factoring in management optimism. Our target price is increased to INR 375 (from INR 290), as we raise FY26E PE multiple to 20x (from 18x). Downgrade to HOLD (from Buy).