@krishnasristy Every weekend, I pull the data from Google Finance (I don’t enter data manually). After that I have to make some small tweaks in the template and the data is ready. Not very difficult.

@ranvir : Incase it’s still in your radar, I seek your synthesized view for the Nilkamal’s business.

Ok, On the contrary you mean to say one identify and grab value multipliers at nascent stage?

I would like to bring PCBL share back up again on the radar again as there is a good buying opportunity after the 20% correction.

Few things to keep in mind:

1. PCBL Ltd is India’s largest carbon black producer and the 7th largest
   worldwide. Infact, it commands a 35% – 40% market share of the domestic carbon black market, with other players having sub-20% market share.

2. The firm operates in three major segments: Rubber Black – Tyres ( 65% of the revenue), Rubber Black – Non Tyres (25% of revenue – e.g., conveyer belt, industrial hoses) and specialty chemicals (10% of revenue – e.g., foodplate, print ink, camera body etc.)

3. There are two new areas (both high-margin) that PCBL will further diversify into in 2024:

• Post its 3800 crore acquisition of Aquapharm, India’s largest phosphonate manufacturer, PCBL gets access to water treatment sector. Aquapharm has all the largest FMCG (e.g., P&G, Reckitt, Unilever) as its clients so PBCL is inheriting a strong business base
• It has invested 130 crore to get 51% stake in the JV with Australia silicon nano-technology specialist Kinaltek limited. This will give access to battery applications esp. for EV batteries

4. Currently, 70% of the overall demand is domestic in nature. Domestic demand for carbon black is increasing, driven by the expansion of tyre manufacturing capacities, reduced tyre imports from China, heightened demand for PV/CV/tractor tyres, specialized tyres for EVs and rising tyre exports due to anti-dumping duties on Chinese tyres.

5. In addition, with the global restriction (anti-dumping) on Chinese Carbon black, reduced consumption of Russian Carbon black due to war and regulatory constraints on European and North American production has opened a huge international market demand for PCBL. It now operates in 50+ countries.

6. Future trends: Over FY23-26E, the sales volumes of rubber black is anticipated to experience a CAGR of 8.5%, In same breath, the volumes of performance black and specialty black are projected to witness a CAGR growth of 17% and 23%.

7. PCBL is a part of the RP-Sanjeev Goenka Group of Kolkata which operates other listed companies like CESC in power, Spencer in retail shopping, First source which is a BPO, IPL team – Lucknow Giants and others. Most of its companies are AA-rated, so being part of this group gives PCBL a very strong financial flexibility.

8. While PCBL’s sales volume grew by 19% YoY but the revenue only grew by 2.1% YoY. This happened due to the 15% decline in market prices which was a direct result of oversupply of cheap Russian carbon black before active consumption restraints were placed. EBITDA improved by over 30% due to the rising share of high margin performance and specialty carbon blacks in the overall sales mix. In line, the company profits also increased by 12%.

9. From an equity research analyst perspective, they are anticipating a 40% upside on the stock with revenue growth of 20% and profit growth of 16% – all bullish on capacity increase and high demand across product lines.

10. Based on my valuation models (football field with relative, DCF) – the stock is undervalued at the moment by 15% – 20% across the different valuation metrics that you take.

So overall, its an interesting hidden gem that has the potential to grow after the correction is complete.

Please check out the link (6.5 minutes) where I further structure this detail out. Your feedback will help me course correct and increase the depth of my analysis:

Fundamental Analysis of India’s Carbon Black Leader: PCBL

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