PCBL’s Ebitda for the final quarter of FY22 was upset owing to larger different bills, however gross revenue/kg improved quarter-on-quarter (QoQ). The firm’s administration sounded bullish on the carbon black cycle with beneficial demand-supply and anticipates an upside danger to each volumes and spreads. It sees the potential of an upside danger to spreads for carbon black within the exports market with provide restrictions from Russia and China.
We anticipate it to announce extra capability growth within the rubber carbon black if demand from export markets sustains, which ought to improve quantity development visibility. We have elevated our earnings per share (EPS) estimates by 10-15% over FY23-24E on higher volumes and unfold assumptions. Thus we preserve ‘buy’ and have elevated our goal worth to 170 (from
147; unchanged 12x FY24E EPS).
Early indicators of an upcycle in carbon black: Russia and China, the 2 key exporting international locations, are seeing provide constraints. Russia has 1.1 mnte capability with 70% exports to Europe and is hit by sanctions. China is seeing feedstock restrictions and trade consolidation. Thus, PCBL anticipates a beneficial demand-supply scenario and is taking a look at a quicker ramp-up of recent capability, and extra line commissioning/announcement within the speciality.
Carbon black volumes flattish YoY however are down 3.6% QoQ: PCBL’s quantity development is restricted on account of peak capability utilisation, and the QoQ dip is from two decrease working days in Q4FY22. It is within the course of to commercialise greenfield capex in Chennai with a 150 ktpa carbon black plant prone to begin manufacturing from December 2022. India volumes dipped 6.7% year-on-year (YoY) to 77 kte on weak demand. The firm offered larger export volumes, which grew 16.2% YoY to 35kte. Speciality quantity development has accelerated at 22.7% YoY to 9.3kte and has now contributed 8.3% of complete volumes.
Gross revenue/kg falls 10.7% YoY purchase up 3.3% QoQ: The gross revenue/ kg was damage from delay in pass-through of feedstock inflation, and decrease contribution from energy (energy manufacturing dipped QoQ on two decrease days). The rising and sticky excessive crude costs are a priority for the corporate. However, it’s seeing silver lining for enchancment in spreads from tightening provide on Russia and China scenario and demand normalisation. It would additionally profit from the rising contribution of speciality carbon black and energy (on account of larger realisation and quantity development with new capability addition). Cost inflation hits Ebitda: Revenue of PCBL grew 40% YoY, led by larger realisation which rose 41.2% YoY to 106/kg. However, gross revenue dipped 11.1% YoY to
315 crore on contraction in spreads.
Source: www.financialexpress.com”