Buy PCBL; target of Rs 200: 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 FY23).

Outlook

We assign BUY rating on PCBL amid healthy volume growth in the offing, increasing share of speciality grade carbon black, consequent rise in margins and return rations, inexpensive valuations and healthy b/s • We value PCBL at a conservative 13x P/E on FY25E EPS of Rs 15.4/share with our consequent target price as Rs 200/share (over the next 6 months).