Phillips Carbon Black Ltd
(BSE Code: 506590) (CMP: Rs.230.30) (FV: Rs.2)
Philips Carbon Black Ltd, a part of the RP Sanjiv Goenka group, is the sixth largest producer of carbon black with ~40% market share in India. The company has successfully turned around its operations with healthy EBITDA margins and RoE and RoCE of over 25%. Its margin per tonne is likely to improve further as the antidumping duty on Chinese imports of rubber carbon black will benefit local manufacturers. The company reported its highest ever PAT in Q2FY19 (Rs.50.78 crore, up 113%) on account of a shift in product mix towards more value-added premium grades of carbon black. Revenue from operations grew 33% to Rs.880.26 crore while EPS more than doubled to Rs.6.26 v/s Rs.2.95 a year ago. The company plans to enhance its production capacity by 50% (50,000 tonne addition by Q3FY19, 30,000 tonne addition by Q4FY19 and 1,50,000 tonne addition by Q2FY20). If these plans play out well, the stock could turn into a multibagger. Investors can accumulate the stock on dips for excellent returns in the medium-to-long term.
By Bikshapathi Thota *******