Synopsis
JM Financial reiterates a buy call for PCBL, raising the target price to Rs 635 from Rs 445. PCBL’s management outlined growth plans, including expansion in battery chemicals and Aquapharm. JM Financial revised its FY25-27E EPS estimates upwards and expects strong PAT growth. The stock currently trades at attractive valuations despite recent gains. ETMarkets.com JM Financial has a buy call on PCBL with a target price of Rs 635. The current market price of PCBL is Rs 474.
PCBL, incorporated in 1960, is a Small Cap company with a market cap of Rs 17725.64 crore, operating in the Tyres sector.
PCBL’s key Products/Revenue Segments include Carbon Black, Power, Export Incentives and Scrap for the year ending 31-Mar-2024.
Financials
For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 2168.85 crore, up .67% from last quarter Total Income of Rs 2154.44 crore and up 45.62% from last year same quarter Total Income of Rs 1489.39 crore. The company has reported net profit after tax of Rs 123.45 crore in the latest quarter.
Investment Rationale
On its Investors Day, PCBL?s management gave insights on the company?s ongoing growth plans and long-term opportunities. Key takeaways are ? 1) battery chemicals has great potential and is expected to contribute from FY26E/27E, 2) for Aquapharm, the target is to grow each vertical and backward integrate to yellow phosphorous (leading to 15% sales volume CAGR over the next 5 years with margin improvement), 3) growth momentum in carbon black is likely to continue, 4) current expansion plans will not require any leverage due to sufficient cash flow generation, and 5) aim to improve RoE. Taking some of these insights into consideration, and the brokerage’s calculations, JM Financial has revised its FY25-27E EPS estimates upwards by ~10-22%. They continue to remain constructive on the name as the stock is trading at ~13x/11x FY26E/27E EBITDA despite the sharp run-up. The company expect
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