Phillips Carbon Black Ltd

[vishnuvega]

Belonging to the RPG Group, Phillips Carbon Black Ltd. is the undisputed leader of carbon black with a capacity to produce 270,000 MTPA, which is almost 47% of the total installed capacity of carbon black in India. Out of the total export of this powdery substance from India, 70% is made by the company while in the domestic market it has an overall share of more than 40%. Recently, in order to generate extra revenue by sale of power, the company put up a huge 30 MW power generation plant that went on stream in September 2008. For future growth, it is looking to expand its installed capacity by whopping 140,000 MTPA through greenfield and brownfield expansions along with the addition of another 32 MW of captive power generation facility. In short, post all expansions by March 2010, its carbon black production capacity will stand augmented to 410,000 MTPA and power generation capacity to 80.50 MW. Going forward, the company is expected to experience some margin pressure due to a fall in carbon black prices although a part of it will be compensated by a fall in carbon black feedstock prices. Looking at the H1FY09 figures and forex loss, it may clock a turnover of Rs.1100 cr. with PAT of Rs.45 cr. for FY09 i.e. an EPS of Rs.16 on its equity of Rs.28.25 cr. It may declare 25% dividend for FY09, which gives a yield of more than 5% at CMP. Interestingly, a couple of months back warrant holders opted for conversion of 30 lakh warrants at Rs.149 per share and since then scrip has fallen drastically. A good bet at current levels.