Phillips Carbon Black Ltd's Q3FY19 standalone net profit rises 92% yoy to Rs109cr : Beats Estimates

The company’s standalone revenue stood at Rs946cr, up 54% yoy and 7% qoq.

Jan 16, 2019 01:01 IST India Infoline Research Team

Phillips Carbon Black Ltd Q3FY19

Standalone Results Q3FY19: (Rs. in cr)

Q3FY19 YoY (%)
Revenue 945.89 54.5
EBITDA 172.22 64.6
EBITDA Margin (%) 18.2 112
Net Profit (reported) 108.58 91.9
***EBITDA margin change is bps

Phillips Carbon Black Limited
(PCBL) reported better than expected numbers for Q3FY19. Standalone revenue was up 54% yoy (7% qoq) at Rs946cr, higher than consensus expectation of Rs860cr. EBITDA came in 65% yoy higher (2% qoq lower) at Rs172cr, in-line with expectations. EBITDA margin expanded 112bps yoy (contracted 166bps qoq) to 18.2%. Reported PAT jumped 92% yoy (1% qoq) to Rs109cr, better than street estimate of Rs106cr.

Other Highlights:
  • While we do not have volume data as yet, we believe that top-line growth was driven by pass-through of crude-based derivatives to its tyre customers. Raw material cost went up 62% yoy, 14% qoq and 306bps yoy as % of sales; however, the recent correction in crude prices could benefit gross profit from Q4FY19 onwards.
  • Operating leverage benefits and lower employee cost (142bps yoy lower and 79bps qoq lower as % of sales) led to a healthy 65% yoy growth in EBITDA for the quarter.
  • Performance at the PAT level was led by foreign exchange gain of Rs7cr.
  • The Board of Directors of the company declared a dividend of Rs3.50 per equity share.

Our Take:

The current quarter (Q3FY19) results were impressive with revenue and PAT coming well above expectation. The tyre sector is undertaking capital expenditure aggressively, expecting strong replacement demand, even though OEM growth has slowed somewhat. Nearly 66% of tyre demand comes from the replacement market, which is going strong currently. Against cumulative capex of Rs27,800cr undertaken by tyre industry in the past decade, Rs20,000cr of capex would be undertaken by companies over next 5 years. This bodes well for PCBL, given that it is the largest carbon black player in India with 37% market share by capacity. At CMP, the stock trades at 7x FY21E EPS and has surged ~5% post result announcement.

Technical View:

Phillips Carbon Black Ltd is currently trading at Rs. 212.20, up by 9.2 points or 4.53% from its previous closing of Rs. 203 on the BSE.
The scrip opened at Rs. 205 and has touched a high and low of Rs. 214.50 and Rs. 204.85 respectively. So far 38,09,103 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.

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