Prabhudas Lilladher has reiterated a 'Buy' rating on PCBL with a target price of ₹360, highlighting the company's margin-focused strategy amid challenging export volumes. In its Q2 FY2027 results, PCBL reported a 14% year-over-year revenue growth to ₹24.7 billion, though management noted difficulty in reaching its 7% annual volume growth target.
Prabhudas Lilladher has maintained its 'Buy' rating on PCBL, establishing a price target of ₹360 following the company's performance in the second quarter of fiscal year 2027. This update comes as the company navigates a complex global market, balancing a push for higher margins against headwinds in export volume growth.
During the quarter, PCBL reported consolidated revenue of ₹24.7 billion, a 14% increase compared to the same period last year. Net profit also tracked higher, reaching ₹74.2 crore, up from ₹61.5 crore in the previous year. A significant aspect of this performance was the company's strategic decision to limit sales in lower-margin segments. This shift in operational focus was a direct response to rising raw material expenses and volatile freight costs.
The company reported EBITDA per tonne of approximately ₹19,800. Investors should note that this figure includes a one-time benefit of ₹2,300 per tonne resulting from a U.S. tariff refund. When this one-time gain is excluded, the normalized margin per tonne sits at roughly ₹17,500. By prioritizing profitability over total volume, the company has managed to maintain stable financial performance despite an 18% quarter-over-quarter decline in export carbon black volumes.
While the margin-focused approach has provided stability, the company faces notable challenges. Management has acknowledged that achieving the initial 7% volume growth target for fiscal year 2027 will be difficult. Global market conditions, including reduced refinery throughput in Russia and rising coal tar costs in China, are tightening feedstock availability, which creates uncertainty for future supply chains.
Additionally, investors may watch for risks related to the company's execution of new initiatives. This includes the integration of Aquapharm Chemical Limited and the scaling of operations in the battery materials sector. The potential for continued freight cost volatility and aggressive pricing from competitors in certain markets also remains a relevant factor for the company’s near-term outlook.
Looking ahead, the primary monitorables for stakeholders include the success of the company’s shift toward higher-value product segments and its ability to manage margin health while navigating volume growth constraints. The impact of these operational decisions, alongside progress on new business integrations, will be key to determining the company's performance in the coming quarters.