Buy Phillips Carbon Black; target of Rs 180: ICICI Direct

ICICI Direct's research report on Phillips Carbon Black

Phillips Carbon Black (PCBL) reported healthy performance in Q2FY21. Net sales for the quarter were at Rs 664 crore, down 23% YoY amid a decline in realisations (Rs 58/kg in Q2FY21 vs. Rs 82/kg in Q2FY20) tracking softer crude prices and 8% growth in volumes (110,397 tonne in Q2FY21 vs. Rs 102,321 tonne in Q2FY20). EBITDA in Q2FY21 was at Rs 105 crore with EBITDA margins at 15.9% (EBITDA/tonne at Rs 9,550/tonne). Operating margins came in better despite inventory loss at the raw material front tracking lower overhead costs. PAT in Q2FY21 was at Rs 58 crore.

Outlook

We retain our positive stance on PCBL and assign BUY rating to the stock, valuing it at Rs 180/share i.e. 10x P/E on FY22E EPS of Rs 18.0/share.

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