Centrum's report on Oriental Carbon & Chemicals
Oriental Carbon & Chemicals (OCCL) continued its steady performance in Q3 with strong topline growth of 12% and EBITDA growth of 8% YoY. Phase 1 (5500 tpa) brownfield expansion of IS capacity at Mundra was commissioned in Dec’16, three months before schedule and work on Phase 2 would begin post Q3 results. Early commissioning of expansion would put OCCL on a strong runway of growth from Q4 with volumes expected to go up continuously over the next 8-10 quarters and operating leverage benefits providing the margin kicker.
Outlook
We expect OCCL to steadily increase its market share in the next few years through traction into new geographies (US & China). Maintain Buy and revise our TP to Rs 1,090 based on our conservative adjusted OCF based methodology.
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