Phillips Carbon Black - Company Update - ICICI Direct

The Commerce Ministry has concluded its study thereby proposing to extend anti-dumping duty (ADD) on imports of carbon black (used for rubber applications) into India; largely from China and Russia. The ministry opined that imports without ADD will cause substantial injury to the domestic carbon black industry. The study proposes to impose a duty of US$494 per tonne on carbon black origination from China and US$36.2 per tonne on carbon black originating from Russia and other countries. The said proposal is likely to be approved by the Finance Ministry with final notification expected by December end. Extension of ADD helps protect sales volumes of domestic carbon black players with consequent better operational efficiencies and is not a medium to increase prices to import parity levels. It is positive for all carbon black players, especially Phillips Carbon Black (PCBL) given its market leadership domestically (market share of ~35%+).

Valuation & Outlook

PCBL has a healthy B/S (limited leverage), capital efficient business model (RoCE>15%) and generates robust cash flow from operations (CFO yield >15%). We maintain our BUY rating on the stock with a revised target price of Rs. 210 (Rs. 180 earlier) valuing it at 10x P/E on FY23E EPS of Rs. 21.0. Conservatively, as of now, we have not built in any volumes from greenfield capex under implementation as the company awaits regulatory approvals.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_PhillipsCarbon_CoUpdate_Dec20.pdf

Shares of PHILLIPS CARBON BLACK LTD. was last trading in BSE at Rs.167.9 as compared to the previous close of Rs. 164.85. The total number of shares traded during the day was 167749 in over 3067 trades.

The stock hit an intraday high of Rs. 170.7 and intraday low of 165.5. The net turnover during the day was Rs. 28187797.

Source : Equity Bulls

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