Phillips Car­bon Black Ltd

Money Times - - Muhurat Picks -

(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 *******

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