PCBL hits new high in weak market on heavy volumes; zooms 50% in 9 days

Shares of PCBL hit a new high of Rs 390, gaining 3.5 per cent on the BSE in Monday’s intra-day trade amid heavy volumes in otherwise a weak market on healthy business outlook.  The stock of RP-Sanjiv Goenka group company has surged 50 per cent in past nine trading days. In past two months, the stock zoomed 86 per cent.

At 10:29 am; PCBL was trading 2.7 per cent higher at Rs 387.25, as compared to 1.8 per cent decline in the BSE Sensex. The average trading volumes on the counter jumped nearly three-fold. A combined 16.84 million equity shares representing 4.5 per cent of total equity have changed hands on the NSE and BSE.

PCBL (erstwhile Phillips Carbon Black) is the leading manufacturer of carbon black, which is used as a reinforcing material in tyres. PCBL also derives ~11 per cent of sales volume from speciality carbon black, which fetches high margins & finds application in paints, plastics, etc. Recently acquired speciality chemical company i.e. Aquapharm Chemicals Pvt. Ltd (ACPL) in water treatment and industrial cleaning chemicals space.

ACPL enjoys a strong market position in the business of manufacturing specialty water treatment solutions like phosphonates, chemicals used in oil and gas sector, and polymers catering to reputed global customers across diverse end-markets. The acquisition shall lead to diversification of the existing product portfolio of PCBL into high margin speciality chemicals business, with wider geographical reach. 

Meanwhile, PCBL (TN) plant has reached a capacity utilization of 60 per cent in Q4 FY24. The company plans to reach full capacity utilization in TN plant by the end of FY25.

Specialty expansion of 20,000 MTPA at Mundra is under implementation and would be commissioned during current year This would increase the Specialty blacks capacity to 112,000 MTPA in FY25. 

Long-term prospects of the specialty segment look very positive, and PCBL expects the business potential to sustain the growth momentum. The margins of speciality segment should continue to remain strong driven by changes in global supply chain, consumption pattern and strong demand. The company said it evaluating a new greenfield expansion for which, necessary discussions are already underway. This would increase capacity beyond 1 million MTPA.

Started Brownfield expansion of 90,000 MTPA carbon black at the PCBL (TN) facility. This would be completed in FY25 in two phases of 30,000 MTPA and 60,000 MTPA. This would take total capacity 8,80,000 MTPA next year, PCBL said in investor presentation.

With volume growth on the anvil amid thrust on exports, increasing share of high margin specialty grade carbon black sales and efficiencies & o/p leverage to be realised at ACPL, EBITDA margins are slated to improve at PCBL to ~16.7 per cent levels in FY26E with EBITDA/tonne in carbon black space seen sustaining at ~Rs 20,000/tonne mark. Consequent RoE is also seen stable at ~15 per cent, analysts ICICI Securities said. The stock however is trading above brokerage firm’s target price of Rs 340 per share.