Dear All,
Forwarding you the Result Update on Phillips Carbon Black Ltd. for 4QFY2011 with a Buy recommendation and a Target Price of `202 (12 months).
Phillips Carbon Black Ltd. (PCBL) reported decent growth of 22.4% yoy in 4QFY2011 to `444cr (`363), which was slightly above our estimates.
OPM increased to 13.7% (11.6%), while PAT declined by 8.2% yoy to `33cr (`36cr), mainly due to low tax in 4QFY2010. The key positive from the result was higher realisations in the power segment. We remain positive on the business of the company, owing to the favourable demand growth in the carbon black industry in the years to come. We maintain our Buy recommendation on the stock.
Power realisations recover: The power segment reported higher realisations during the quarter at `3.13/unit, up from `2.52/unit in 3QFY2011. Consequently, the segment reported an increase of 40.2% yoy in sales.
The carbon black segment also recorded healthy 21.9% yoy growth to `423cr (`347cr). However, margin of the carbon black segment slipped by 367bp yoy, whereas the power segment’s margin increased by 807bp yoy. Going ahead, we expect the power segment to continue showing improved performance.
Outlook and valuation: We maintain our positive outlook for PCBL, given strong demand growth in the industry. The commissioning of the 50,000MT plant in Mundra would also lend a boost to production. The power segment’s realisations are also showing signs of firming up, which bodes well for the company. In view of high crude oil prices, we have increased our sales estimates for FY2012E and FY2013E by 7.5% and 9.8%, respectively, as realisations would go up accordingly. We have reduced our OPM estimates by 92bp and 119bp, respectively, to 13.1% for each year. We maintain our Buy recommendation on the stock with a target price of `202.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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