PCBL Stock Hits New All-Time High, Surges 4170% in a Decade; Analysts Bullish on Future Growth

Continuing its impressive upward trajectory, shares of PCBL soared by 10.19%, reaching a historic peak of ₹244.90 each in today’s trading session. This surge contributed to an 84% gain for the stock in the current year, marking its best annual performance since CY17.

In terms of long-term performance, PCBL’s shares have delivered an outstanding 204% return over the last three years. More remarkably, over the past decade, the stock has witnessed an incredible surge of 4,170%, escalating from ₹5.62 per share to the current value of ₹238.40. Analysts at JM Financial suggest that there is still room for further growth in the stock.

PCBL stands as one of India’s largest carbon black manufacturers, with a robust global presence and a substantial customer base spanning more than 45 countries. The primary raw material in the production of automotive tires, carbon black, is produced using carbon black feedstock (CBFS) and tar oil.

JM Financial is optimistic about PCBL’s future prospects, citing several structural tailwinds, including elevated coal tar prices, limited capacity expansions in North America and Europe, lower steel production, and a shift towards electric arc furnace steel plants. These factors are expected to boost coal tar prices, benefitting PCBL.

Additionally, the brokerage highlights a 40% shortage of virgin carbon black in Europe before the Ukraine war, coupled with rising demand in North America. JM Financial believes that PCBL, among other carbon black players, is well-positioned to competitively export to these regions.

Emphasizing PCBL’s focus on specialty and performance blacks, especially those used in EV batteries, JM Financial anticipates enhanced profitability for the company. The brokerage suggests that PCBL might explore entering the Carbon Nanotube (CNT) market through inorganic expansions, following the trend set by its contemporaries.

JM Financial projects a volume Compound Annual Growth Rate (CAGR) of 12% for PCBL over FY23–26E, driven by the introduction of the Greenfield Chennai facility and the two specialty black lines in the Mundra facility.

Anticipating an improvement in PCBL’s EBITDA/Kg to ₹18/kg by FY27E, JM Financial forecasts a positive trajectory for the company. The brokerage predicts EBITDA to grow to ₹10.9 billion (14% CAGR over FY23–26E) and PAT to reach ₹6.2 billion (12% CAGR over FY23–26E).

In light of these favorable factors, JM Financial initiated coverage on PCBL with a ‘buy’ rating, setting a target price of ₹290 apiece, indicating a potential upside of 22% from the current trading price of ₹238.40.

JM Financial justifies the valuation premium to PCBL’s Chinese peer (Jiangxi Black Cat Carbon), stating that PCBL’s increasing share of specialty blacks and the upcoming superconductive carbon black position it for a multiple re-rating from a traditional commodity to a semi-specialty play.

The positive outlook and growth potential outlined by JM Financial make PCBL an intriguing stock to watch in the coming months.