Buy Phillips Carbon Black Limited : Nirmal Bang

Carbon Black Rally 2006 020

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Phillips Carbon Black Limited, (PCBL) is a part of the RPG Group and is the leading producer of Carbon Black (CB) in the country. PCBL sells CB to almost all tyre companies in the country. It is the world's ninth largest manufacturer of Carbon black. Nirmal Bang in it’s recent research report, came out with a  buy recommendation.

At the current market price of Rs. 141 per share, PCBL is currently trading at a PE of 4.7x FY10E and 4.1x FY11E EPS estimates. We expect the company to earn a RONW of 33% in FY10E and 29% in FY11E. At Rs. 141 per share the stock is trading at a discount of 73.2% from our intrinsic price of Rs. 244 per share which is 8.1x FY10E and 7.1x FY11E earnings. We assign a BUY rating on the stock with a long term view with a revised Price target of Rs. 244 per share.

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