Shares of PCBL Ltd plunged 11 per cent in Monday's trade as the company's Q3 operational performance came in weaker-than-consensus estimates, with a sequential dip in carbon black volumes, mainly due to lower specialty black volumes. This was due to destocking at the customers’ end caused by elevated inventory levels, analysts noted as they cut their earnings estimates, dragging the stock lower. Their target prices, however, suggest upside potential ahead.
The stock fell 11.32 per cent to hit a low of Rs 346.90 on BSE. ICICI Securities said lower volumes in carbon black, particularly in specialty carbon black and Aquapharm’s tepid performance hurt numbers. Carbon black’s underlying business remained intact and should improve as volumes recover in FY26, it said.
"PCBL is increasing efforts in Aquapharm by expanding its geographical presence, and enhancing product portfolio – shall also be helped by increased feet-on-the-street. PCBL’s plans on battery chemical is also on track; more clarity shall emerge as the pilot plant is commissioned in FY26. PCBL’s capex plans remain unchanged," it said.
The brokerage cut its target on the stock Rs 400 from Rs 415.
Factoring in Q3 results and the management commentary, JM Financial lowered its FY25, FY26 and FY27 Ebitda estimates by 7 per cent, 10 per cent and 12 per cent, respectively. It also cut its EPS estimates for PCBL by 17-20 per cent for the same period.
"Also, our target price is revised Rs 500 (SoTP based) from Rs 620 earlier. We expect PCBL to register 16 per cent/34 per cent Ebitda/EPS CAGR over FY25E-27E. The stock currently trades at an attractive valuation of 18 times March 2027 EPS and 10 times March 2027 Ebitda. Hence, we maintain BUY," it said.
Nuvama said PCBL’s long-term growth story, backed by diversification of businesses holds merit, but elevated debt levels and a likely turnaround in Aquapharm are key monitorables.
"Given these factors, we revise rating to ‘HOLD’ (from ‘BUY’) and our target price to Rs 397. We move to valuing PCBL on consolidated estimates, at 12 times Q3FY27 EV/Ebitda," it said.