Target: ₹635
CMP: ₹479.10
On its Investors Day, PCBL’s management gave insights on the company’s ongoing growth plans and long-term opportunities.
Key takeaways are: Battery chemicals has great potential and is expected to contribute from FY26E/27E; for Aquapharm, the target is to grow each vertical and backward integrate to yellow phosphorous (leading to 15 per cent sales volume CAGR over the next 5 years with margin improvement); growth momentum in carbon black is likely to continue; current expansion plans will not require any leverage due to sufficient cash flow generation; and aim to improve RoE.
The company highlighted that it would be able to pare down debt completely after servicing working capital and capex requirements with internal cash flow generation.
Taking some of these insights into consideration, and our calculations, we have revised our FY25-27E EPS estimates upwards by about 10-22 per cent. We continue to remain constructive on the name as the stock is trading at around 13x/11x FY26E/27 EBITDA despite the sharp run-up. We expect 28/26 per cent PAT CAGR over FY24-27/24-29 (much lower than the company’s target of 37 per cent PAT CAGR over FY24-29).
We maintain Buy with a revised SoTP-based Mar’26 target price of ₹635 (from ₹445 earlier).