Tuesday, February 17, 2015

Philips Carbon Black - Buy

Our research has come up with a long term pick in Philips Carbon Black.  The stock after hitting a high of 170 levels is trending towards Rs.125/-

Company Background

Phillips Carbon Black Limited (PCBL) is an India-based manufacturer of carbon black. The Company also manufactures various grades of specialty black. The Company operates through two business segments: Carbon black and Power. PCBL manufactures carbon black, a filler used in rubber compounds, and customized blacks for specialized applications and specialty blacks for non-rubber applications, such as films, pipes, automotive, fiber and ink. 

The power generation process involves recovery and utilization of the thermal energy of the process waste gas being produced from carbon black manufacturing process. This waste heat/gas is utilized to generate steam, which in turn is used to generate electrical energy. PCBL has capacity to produce 472,000 metric tons per annum of carbon black across four locations in India. The Company also has co-generation green power plant at each of these locations. PCBL is a part of the RP-Sanjiv Goenka Group of Companies.

Our Recommendation :

The scrip has given a decent return of 86% it had a low of Rs.90 and peaked out at Rs.168 almost doubling from the bottom. It has corrected 20% during the last 1 month 6% in 3 months.  Investors with a short term perspective should buy around 125 levels and exit around 205.  

Caution :
This is fundamentally long term scrip with a potential to grow over 9-12 months time horizon.  Enter around Rs.125 level and hold for a target of Rs.205 holding period of 6 months.  Buy all declines to exit on rises and do not trade in quantities larger than > 1000 - it can be in active once the rise and fall have happened.  

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