Phillips Carbon Black - Company Update - ICICI Securities

Phillips Carbon (PCBL) reported a steady performance in Q4FY20. Net sales in Q4FY20 were at Rs. 700 crore, down 24% YoY. Carbon black sales were at Rs. 680 crore, down 24% YoY, while power segment sales were at Rs. 39 crore, down 7% YoY. Carbon black sales volume in Q4FY20 was at ~99,000 tonne (down 3% YoY) with consequent realisations at Rs. 69/kg vs. Rs. 88/kg in Q4FY19. EBITDA in Q4FY20 was at Rs. 99 crore with EBITDA margins at 14.2% and consequent EBITDA/tonne at Rs. 10,000/tonne. PAT in Q4FY20 was at Rs. 72 crore, almost flat YoY, supported by a negative tax rate. On the B/S side, gross debt was down from Rs. 796 crore in FY19 to Rs. 719 crore in FY20. On the cash flow front, CFO for FY20 was at ~Rs. 550 crore led by improved net working capital cycle with FCF for the year at ~Rs. 200 crore (>10% FCF yield).

Valuation & Outlook

We like PCBL for its capital efficient business model (RoCE>15%), controlled leverage on B/S (debt: equity at 0.4x in FY20) as well as robust cash flow generation. We maintain our BUY rating on the stock with a target price of Rs. 135 valuing it at 5.5x EV/EBITDA (8.5x implied P/E) on FY22 numbers.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_PhillipsCarbon_CoUpdate_Jul20.pdf

Shares of PHILLIPS CARBON BLACK LTD. was last trading in BSE at Rs.108.45 as compared to the previous close of Rs. 100.3. The total number of shares traded during the day was 1816513 in over 22605 trades.

The stock hit an intraday high of Rs. 113.2 and intraday low of 101.6. The net turnover during the day was Rs. 198090657.

Source : Equity Bulls

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