Buy PCBL; target of Rs 170: ICICI Direct

ICICI Direct's research report on PCBL

PCBL Ltd (erstwhile Phillips Carbon Black) is the leading manufacturer of carbon black, which is used as a reinforcing material in tyres. PCBL also derives ~9% of sales volume from speciality carbon black, which fetches high margins and finds application in paints, plastics among others • It has a healthy margin profile, capital efficient business model (RoCE>15%) with limited leverage on b/s (~0.3x debt: equity as of FY22).

Outlook

We retain BUY rating on the stock amid organic growth on anvil amid new capacity coming on stream, rising share of speciality grade carbon black and it gaining more traction in export markets amid lower supply from China. Incorporating FY25E and rolling over valuations, we now value PCBL at unchanged target price of Rs 170 i.e. 12x P/E on FY24-25E average EPS.

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PCBL - 01 -01-2023 - ic