PCBL Q1 Review - Expects Volumes, Efficiency Gains To Drive Consistent Earnings Growth: ICICI Securities

ICICI Securities Report

PCBL Ltd. Q1 FY25 volume growth accelerated with new capacity addition alongside spreads remaining favourable. The company expects volumes to grow at a compound annual of 11–12% p.a. over the next five years; and plans for large capex to capture the opportunity.

It also anticipates Ebitda/kg to enhance by Rs 4-5/kg in four–five years on better product mix and efficiency gains. Aquapharm also plans to grow revenue by 15–20% p.a. over the next few years, as it expands market share in phosphonates in conjunction with a sharp rise in capacities in green chelates and other products.

PCBL expects to increase net profit to Rs 25 billion (5 times) in next five years; which is ambitious, in our view. We cut our FY25E earning per share by 1.5%, but raise FY26E earning per share by 19%, factoring in management optimism.

Our target price is increased to Rs 375 (from Rs 290), as we raise FY26E multiple to 20 times (from 18 times). Downgrade to 'Hold' (from Buy).

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