IGI Logo

Strong Q1, but Inventory gains to normalize in Q2

PCBL reported consolidated revenue of INR24.7bn in Q1FY27, registering a growth of 17% YoY and 20% QoQ. The performance was primarily driven by a 20% increase in Carbon Black segment revenue, supported by higher realizations. However, Carbon Black volumes declined 5% QoQ due to lower export volumes amid elevated freight costs, while domestic volumes remained robust, growing 15% YoY. EBITDA/tn improved sharply to INR22,990 from INR17,791 in Q1FY26, driven by lower input costs and improved realizations. Management has guided for a 14–15% YoY increase in FY27 EBITDA/tn over FY26, implying a full year EBITDA/tn of ~INR17,000. The Aquapharm (Chemicals) segment reported a 16% QoQ increase in revenue, while EBITDA/tn improved 6% QoQ to INR20,449/tn. However, margins are expected to normalize over the coming quarters.

Looking ahead, we expect Carbon Black volumes to grow by ~9% in FY27 and ~5% in FY28, supported by the recently expanded capacity. We expect EBITDA/tn to normalize from the elevated Q1FY27 levels and estimate it at ~INR17,000 in FY27 and ~INR17,500 in FY28. At the current market price, the stock trades at 24x FY28E EPS. However, the current outlook could prove conservative if Russian carbon black supply continues to contract and global capacities remain offline, supporting a tighter demand-supply balance. A ~INR1,500/tn increase over our FY28 EBITDA/tn assumption would translate into nearly a 15% increase in FY28 EPS. Accordingly, we upgrade PCBL to 'Accumulate', valuing the stock at 25x FY28E EPS with a revised target price of INR388. 15% upside to our EBITDA/tn assumptions could provide an additional ~14% upside to our target price.

CB segment increased 19%QoQ/20% YoY in Q1FY27:

Consolidated revenue stood at Rs24.7bn (17% YoY, 19.7% QoQ; (PLe: Rs22.1bn, Consensus: Rs22.4bn. In Q1FY27 the revenue mix across Carbon Black, Power, and Chemicals stood at 80%, 4%, and 16%, respectively. The Chemicals segment increased 3% YoY and 16% QoQ, while the Power segment reported 12% YoY growth and 36% QoQ growth.

EBITDA increased 24% YoY and 63% QoQ in Q1FY27:

EBITDA stood at Rs4bn (PLe: Rs2.7bn, Consensus: Rs2.8bn) (24% YoY, 62.7% QoQ). EBITDAM stood at 16% in Q1FY27 vs 15.1% in Q1FY26 and 11.8% in Q4FY26. Gross Margin stood at 33.3%, improved from 31.2% in Q1FY26, and 29.8% in Q1FY26, driven by higher change in inventory. PAT came at Rs1549mn (64.6% YoY, 285% QoQ).

Please refer disclaimer at Report
SEBI Registration number is INH000000933