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Phillips Carbon - Long Term Buying Opportunity
Phillips Carbon Black Limited, a part of RP-Sanjiv Goenka Group, was set up by Mr. K. P. Goenka in 1960 in collaboration with Phillips Petroleum Company, USA, with the core objective of substitution of the import of carbon black. PCBL is the largest carbon black manufacturer in India and a strong global player with a significant customer base in 40+ countries. The company also produces specialty carbon blacks which are used as pigmenting, UV stabilizing, and conductive agents in a variety of common and specialty products, including plastics, printing & packaging, and coatings.
Product Portfolio:
The company is in the business of manufacturing carbon black and specialty blacks for B2B. Carbon black is used in tyres, non-tyre rubber & non rubber products & the specialty carbon black is used in plastics, inks & toners, paints & coatings, batteries, etc.
Manufacturing Capabilities:
The company owns and operates 4 strategically-located manufacturing facilities in Mundra, Palej, Kochi & Durgapur which presently operates at combined capacity of 5,71,000 TPA of carbon black along with 76 MW of co-generation power. The capacity utilization for FY20 was 86%.
Global Presence:
It is the largest carbon black company in India & the 7th largest producer globally. It has presence across 40+ countries across the world & is the largest Indian exporter of carbon black. Presently, its export sales volume accounts for 29% of revenues.
Research & Development:
Company owns 2 R&D centres in India & Belgium which focuses on improvement of process and machine technology yield improvement feedstock efficiency customization of grades and new product development. It have spent 41 crores on R&D in last 3 years.
PATENTS:
They have obtained the 'Patent Grant Certificate' for two PCBL inventions.
FUNDAMENTALS:
> It is a Small Cap company with a market cap of Rs.4,170 Cr. The company have grown significantly over last few years.
> The ROCE and ROE is at 17% and 17% respectively which is very good considering the size of the company. Positive.
> Price to Book Value ratio is 2.16 which means the company have overall stable fundamentals and not very costly too. Positive.
> Stock P/E is at just 10 which makes the valuation very attractive as compared to the industry P/E at 25. Positive.
> OPM of the company is continuously growing and it is at 19% as per Mar 21 Balance Sheet. Positive.
> Robust Topline and Bottomline, continuously increasing on QoQ basis. Rapidly increasing on QoQ basis after the Covid slowdown.
> Debts: The company have Debts of only Rs.607 Cr as per Mar 21 Balance Sheet which is much within the limit as compared to its Reserves. Company have a vision to reduce it’s debts by allocating a portion of generated cash towards debt repayment.
> Reserves: It is Rs. 1,901 Cr as per Mar 21 Balance Sheet. Continuously increasing since last 8 years.
> Promoters holding is intact at 53.56% since more than last 10 years, like they trust their own business and staying invested. No change at all.
> FIIs & DIIs are also heavily invested in the company, combined holding will be at 8.72% which is growing on YoY basis.
TECHNICALS:
> The stock has given V Shape recovery after the covid fall, this kind of recovery is not very usual. This shows the stock strength.
> On the chart stock is continuously in UPTREND since March 2020 Covid fall.
> Increasing Long Volume towers as indicated by blue box at the bottom indicates that lot of accumulation is going on in the stock continuously. Compare this volume with last 1.5 year volume and you will be able to spot the difference.
> Trading above 100 and 200 DMAs this talks about the strength in the bull run of this stock.
Its key clients include major companies like MRF, Apollo, JKTyre, TVS Tyres, CEAT, Nexen Tyre, Goodyear, Michelin, Bridgestone, Yokohama, Continental AG, etc. Its top 10 clients of the company accounts for nearly 65% of total revenues. One of the few companies in the world to meet US FDA requirements for direct/indirect food contact applications. During the year it has developed customized ASTM carbon black grades for major tyre customers.
It plans to expand its specialty black capacity by 32,000 TPA by 2021 & its carbon black capacity by 1,50,000 TPA by 2023.
Company have strong financials and numbers are continuously increasing on YoY basis specially after the Covid slowdown. It has also increased its production capacity very recently, investing in R&D to add more products to its portfolio, aggressively focusing on reducing its debts. Almost all renowned tyre manufacturing company is heavily dependent on this company for their carbon requirements. The company have great client base. It certainly is a good buy.
Fresh Buy - Above Rs.256
Old Buy – Hold
Target – Immediate target 315, Hold till in UPTREND
Risk Management Tip: Never invest more than 5% of your capital in any single stock.
Your likes and comments motivate us to bring more profitable studies like this.
Happy Investing!
ShareMktSchool
Product Portfolio:
The company is in the business of manufacturing carbon black and specialty blacks for B2B. Carbon black is used in tyres, non-tyre rubber & non rubber products & the specialty carbon black is used in plastics, inks & toners, paints & coatings, batteries, etc.
Manufacturing Capabilities:
The company owns and operates 4 strategically-located manufacturing facilities in Mundra, Palej, Kochi & Durgapur which presently operates at combined capacity of 5,71,000 TPA of carbon black along with 76 MW of co-generation power. The capacity utilization for FY20 was 86%.
Global Presence:
It is the largest carbon black company in India & the 7th largest producer globally. It has presence across 40+ countries across the world & is the largest Indian exporter of carbon black. Presently, its export sales volume accounts for 29% of revenues.
Research & Development:
Company owns 2 R&D centres in India & Belgium which focuses on improvement of process and machine technology yield improvement feedstock efficiency customization of grades and new product development. It have spent 41 crores on R&D in last 3 years.
PATENTS:
They have obtained the 'Patent Grant Certificate' for two PCBL inventions.
FUNDAMENTALS:
> It is a Small Cap company with a market cap of Rs.4,170 Cr. The company have grown significantly over last few years.
> The ROCE and ROE is at 17% and 17% respectively which is very good considering the size of the company. Positive.
> Price to Book Value ratio is 2.16 which means the company have overall stable fundamentals and not very costly too. Positive.
> Stock P/E is at just 10 which makes the valuation very attractive as compared to the industry P/E at 25. Positive.
> OPM of the company is continuously growing and it is at 19% as per Mar 21 Balance Sheet. Positive.
> Robust Topline and Bottomline, continuously increasing on QoQ basis. Rapidly increasing on QoQ basis after the Covid slowdown.
> Debts: The company have Debts of only Rs.607 Cr as per Mar 21 Balance Sheet which is much within the limit as compared to its Reserves. Company have a vision to reduce it’s debts by allocating a portion of generated cash towards debt repayment.
> Reserves: It is Rs. 1,901 Cr as per Mar 21 Balance Sheet. Continuously increasing since last 8 years.
> Promoters holding is intact at 53.56% since more than last 10 years, like they trust their own business and staying invested. No change at all.
> FIIs & DIIs are also heavily invested in the company, combined holding will be at 8.72% which is growing on YoY basis.
TECHNICALS:
> The stock has given V Shape recovery after the covid fall, this kind of recovery is not very usual. This shows the stock strength.
> On the chart stock is continuously in UPTREND since March 2020 Covid fall.
> Increasing Long Volume towers as indicated by blue box at the bottom indicates that lot of accumulation is going on in the stock continuously. Compare this volume with last 1.5 year volume and you will be able to spot the difference.
> Trading above 100 and 200 DMAs this talks about the strength in the bull run of this stock.
Its key clients include major companies like MRF, Apollo, JKTyre, TVS Tyres, CEAT, Nexen Tyre, Goodyear, Michelin, Bridgestone, Yokohama, Continental AG, etc. Its top 10 clients of the company accounts for nearly 65% of total revenues. One of the few companies in the world to meet US FDA requirements for direct/indirect food contact applications. During the year it has developed customized ASTM carbon black grades for major tyre customers.
It plans to expand its specialty black capacity by 32,000 TPA by 2021 & its carbon black capacity by 1,50,000 TPA by 2023.
Company have strong financials and numbers are continuously increasing on YoY basis specially after the Covid slowdown. It has also increased its production capacity very recently, investing in R&D to add more products to its portfolio, aggressively focusing on reducing its debts. Almost all renowned tyre manufacturing company is heavily dependent on this company for their carbon requirements. The company have great client base. It certainly is a good buy.
Fresh Buy - Above Rs.256
Old Buy – Hold
Target – Immediate target 315, Hold till in UPTREND
Risk Management Tip: Never invest more than 5% of your capital in any single stock.
Your likes and comments motivate us to bring more profitable studies like this.
Happy Investing!
ShareMktSchool
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