We suggested that at CMP 200, Phillips Carbon Black is a value buy owing to its cheap valuations and growth prospects. (See Philips Carbon Black – A Firm Grip). The First Quarter results have helped to strengthen that belief.
Phillips Carbon Black reported good results for the quarter ended June 2010.
Phillips Carbon Black‘s Net sales increased to Rs 401.8 crores from Rs 249.9 crores, an increase of 61%.
Phillips Carbon Black‘s net profit stood at Rs 28.7 crores as against Rs 20.5 crores in the corresponding quarter last year, showing an increase of 40%.
Phillips Carbon Black EPS for the full year ended March 2010 was Rs 43.43 per share. The EPS for the 1st Quarter last year was Rs. 7.25. As against that, the EPS for the 1st Quarter this year is Rs. 9.07, representing an increase of 25%.
Philips Carbon Black Q1 Results
|
| (Rs cr) | Jun 2010 | Jun 2009 | YOY |
|---|---|---|---|
| Operating Income | 404.76 | 250.21 | 61.77 |
| Total Expenses | 351.56 | 218.29 | 61.05 |
| Operating Profit | 53.20 | 31.92 | 66.67 |
| Other Income | 0.36 | 0.04 | 800.00 |
| PBDIT | 53.56 | 31.96 | 67.58 |
| PBT | 36.15 | 18.77 | 92.59 |
| Adjusted Net Profit | 28.70 | 20.48 | 40.14 |
Sanjiv Goenka, Vice Chairman of Phillips Carbon Black, pointed out in CNBC that the steep increase in the topline was the result of increase in capacity at Phillips Carbon Black‘s new plant at Mundra which has started operating.
Sanjiv Goenka said that all of Phillips Carbon Black‘s Plants at Durgapur, Mundra, Baroda and Cochin had utilized 100% capacity to meet the steep demand for Phillips Carbon Black‘s products.
Sanjiv Goenka added that Phillips Carbon Black would have a turnover of about Rs 1700 crores in FY 2011 as compared to Rs 1200 crores in FY 2010.
Phillips Carbon Black is going to invest in another plant in Mundra and in a plant in Vietnam. By FY12, Phillips Carbon Black should be looking at going up by about 35% in terms of total capacity.
Sanjiv Goenka said that while the operating profit margin of Phillips Carbon Black had gone down a bit because the raw material which is oil-related has gone up significantly, Phillips Carbon Black was trying to get a price increase through and if that happened, the margins would improve.
Sanjiv Goenka pointed out that because of the captive power plants that were coming into operation, Phillips Carbon Black would save on the power costs significantly and that would improve the operating margins of Phillips Carbon Black. Sanjiv Goenka said that in the Cochin Plant, Phillips Carbon Black would be adding another 10 megawatts of power out of which about 4 megawatts will be consumed by the Cochin plant and 6 megawatts will be for sale.
Phillips Carbon Black is also likely to benefit as a result of the anti dumping duty imposed on the dumping of carbon black that was taking place.
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