A chemical stock engaged in carbon black production in focus after a foreign brokerage set an optimistic target price, boosting investor confidence, and reflecting the growing optimism around its growth potential in the chemical sector.
Share Price
The shares of PCBL Chemical Limited opened at Rs. 405.80 in Wednesday’s session from its previous close of Rs. 407.805. The stock also touched an intraday high of Rs. 413.35 which corresponds to a jump of 1.40 % from its previous close close.
Recent Updates
Target Price
UBS has initiated coverage on PCBL Chemical Limited with a “Buy” rating and a target price of Rs 600, which corresponds to an upside potential of 48% from its current market price on February 5, 2025.
The brokerage highlights the company’s strong foundation and significant growth potential as it transforms into a chemical technology platform.
Strong Growth Projections
UBS forecasts a robust 27% earnings compound annual growth rate (CAGR) over FY24-29, with return on capital employed (ROCE) expanding from 18% to 29%. This growth is expected to come from the company’s ongoing transformation and diversification into new areas of the chemical market, especially through the expansion of phosphonate chemistry. The company’s base business remains a steady compounder and strong cash generator, which further adds to its long-term potential.
Market-Unappreciated Technologies
Additionally, the brokerage house believes, the company’s sophisticated nano-silicon technology offers substantial growth optionality, but it is not yet fully appreciated by the market. UBS expects that this advanced technology, alongside the company’s diversification efforts, will positively surprise the market, unlocking new opportunities and driving future growth.
UBS sees the company as being in the midst of a strategic transformation, with re-rating expected to follow as the business diversifies and strengthens its market position. The target price reflects a positive outlook on the company’s future performance, driven by its transformation efforts.
About the Company
Incorporated in 1960, the company is a key player in the RP-Sanjiv Goenka Group, specializing in the production of carbon black, specialty chemicals, and electricity generation for captive consumption. It also sells surplus power to external customers.
As India’s largest and the world’s seventh-largest carbon black manufacturer, the company has established a strong foothold in the global market. Carbon black, a critical material used in the production of tires, coatings, and plastics, forms the core of the company’s operations.
Over the years, the company has expanded its product offerings, ventured into specialty chemicals, and focused on sustainable energy generation, positioning itself for long-term growth.
Written By: Dipangshu Kundu
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