PCBL Surges 50% in August—Biggest Monthly Gain in 14 Years! More Upside Ahead for This Multibagger?

Shares of PCBL (formerly known as Phillips Carbon Black) have been on a remarkable upward trend, especially in August. The stock saw a massive increase, rising from ₹328.50 to ₹487 per share, marking a 50% gain in just one month. This is the largest monthly gain for the company in 14 years, with the stock even hitting an all-time high of ₹509.40.

Over the past year, PCBL’s stock has surged by 186%, and over three years, it has increased by 306%. The long-term growth is even more impressive, with the stock rising by 3,100% over the last decade, highlighting the company’s strong performance and investor confidence.

Growing Demand for Carbon Black

Analysts remain positive about PCBL’s future, largely due to the growing demand for carbon black. PCBL is one of India’s largest carbon black manufacturers and has a significant global presence, supplying customers in over 45 countries. The expanding automotive tire industry, increased demand for specialty carbon black, and advancements in manufacturing techniques are all contributing to the growth of the global carbon black market. Carbon black is also widely used in plastics, inks, and paints.

In addition to focusing on carbon black, PCBL is diversifying its revenue streams. In March, the company formed a joint venture with Kinaltek Pty Limited, an Australian firm specializing in nano silicon technology for batteries. This partnership is aimed at tapping into the rapidly growing market for battery applications, particularly in electric vehicles.

PCBL also acquired Aquapharm Chemicals Private Limited, a Pune-based specialty chemicals company. This acquisition is a significant step for the company, marking its entry into the global markets for water treatment and oil & gas chemicals. This move aligns with PCBL’s goal of becoming a diversified global player with a broad specialty chemical portfolio.

Diversification and Future Growth

Domestic brokerage firm JM Financial has raised its target price for PCBL’s stock to ₹635 per share, up from ₹445, while maintaining a ‘buy’ rating. The firm expects that by FY29, around 70% of PCBL’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) will come from carbon black and power, down from nearly 100% in FY24. This shift indicates that other business segments will contribute more to the company’s earnings.

PCBL has also planned to invest ₹500 crore to add 3,000 metric tons of capacity for nano silicon materials, which are used to improve energy density and charging rates in batteries. This investment is expected to generate significant revenue, with projections of ₹110 crore by FY27 and ₹260 crore by FY29.

JM Financial also noted that India’s carbon black exports have been rising, while China’s exports have remained stable. The brokerage expects PCBL to achieve a 12% compound annual growth rate (CAGR) in carbon black sales volume, driven by increased competitiveness and capacity expansions.

The brokerage has revised its EBITDA estimates for FY25, FY26, and FY27 upwards by 5%, 8%, and 11%, respectively, following greater clarity on battery chemical capacities and the ramp-up of Aquapharm.

Overall, JM Financial forecasts a 28% and 26% profit after tax (PAT) CAGR for FY24-27E and FY24-29E, respectively.