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EBITDA/tn guidance reiterated; Industry tailwinds intact

PCBL Chemical reported Q2FY27 revenue of INR24.7bn, up 14% YoY and flat QoQ. Carbon Black volumes stood at 134,180tn, with exports declining 18% QoQ as the company curtailed low-margin sales amid elevated freight and raw material costs. EBITDA/tn stood at INR19,800, including a US tariff refund of INR2,300/tn, implying an underlying EBITDA/tn of ~INR17,500. Management reiterated its guidance of double-digit growth in EBITDA/tn over FY26 levels, although volume growth is expected to remain subdued. Aquapharm reported revenue of INR4.3bn and EBITDA of INR420mn, supported by 15% YoY growth in application-specific solutions. Management expects double-digit revenue growth in FY27.

We remain constructive on PCBL, supported by improving global carbon black supplydemand dynamics. Higher coal tar costs in China and lower Russian refinery throughput could tighten feedstock availability and constrain carbon black supply, supporting realizations. A ~INR1,500/tn increase over our FY29E EBITDA/tn estimate could translate into nearly 13% higher FY29E EPS. The stock is currently trading at 18x FY29E EPS. We value the stock at 25x Sep'28E EPS and maintain our BUY rating with a target price of INR360.

CB segment increased 17% YoY:

Consolidated revenue stood at INR24.7bn (14.4% YoY, flat on QoQ; PLe: INR24.6bn, Consensus: Rs25.2bn), H1FY27 revenue stood at INR 49.5, increased by 15.7%. In Q2FY27 the revenue mix across Carbon Black, Power, and Chemicals stood at 79%, 4%, and 17%, respectively. The Chemicals segment increased 10% YoY and QoQ, while the Power segment reported a 12% YoY and 16% QoQ decline.

Adj EBITDA decreased 20% QoQ:

Adj Gross margin stood at 25.7%, contracting by 470 bps QoQ from 30.4% in Q1FY27 and 360bps YoY from 29.3% in Q2FY26 (Q1FY27 adj for INR700mn inventory gain and Q2FY27 adj for INR330mn US tariff refund). Adj EBITDA stood at INR2.6bn (-2% YoY, -20 % QoQ). Adj EBITDAM stood at 10.6% in Q2FY27 vs 12.3% in Q2FY26 and 13.2% in Q1FY27.

Segment-wise:

Carbon Black (CB) Adj EBIT declined by 36% QoQ (Q1FY27 adj for INR700mn inventory gain and Q2FY27 adj for INR330mn US tariff refund). Adj EBIT margin also stood at 8% vs 12.3% in Q1FY27 and 9.6% in Q2FY26. The chemical segment (Aquapharm) saw a 51% QoQ decreased in EBIT with EBIT margin at 1.2% vs 3% in Q2FY26. The Power segment reported a 23% YoY and 26% QoQ decline in EBIT, with EBIT margin contracting to 63%, down 800bps QoQ.

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