Stock outlook: Phillips Carbon Black

by khalid on 11/10/2011 · 0 comments

RPG Group Phillips Carbon Black has recently completed their expansion project at Mundra. During the first Phase the company had a 90000 tonne carbon black capacity where as the 2nd Phase which became operational from this fiscal year has added another 50000 tonnes capacity. All total they have a carbon black production capacity of 140000 tonnes at Mundra.  The company has over 410000 tonne capacity with power generation capacity of 76 MW.

The company’s financial performance in FY 2011 has been pretty good with a top line of 1700 crores and a earnings per share (EPS) of around rupees 35. The new capacity results were added to its quarter one FY 12 performance and showed an increased topline of about 30 percent. The EPS during this quater had been about Rs 12.50 with a cash EPS of Rs 17.50.

For the current fiscal year amidst high interest rate and depreciation cost Phillips Carbon should be able to post an EPS of rupees 50 with a cash EPS of Rs 70. If the results are as per our expectation the company will be trading at a Price to earnings (PE) of 3 multiple and cash PE close to 2 multiple. This makes the stock very attractive at these levels. Presently the share is trading at Rupees 140 levels and a good realisation in this fiscal will help them to come out with good top line and bottom line. We expect good returns from this stock in 8 to month’s periods.

“Bell the bull says: Phillips Carbon Black is the largest exporter of carbon black from Asia.”

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