PCBL Ltd Q4 FY23 Earnings Conference Call Insights

Key highlights from PCBL Ltd (PCBL) Q4 FY23 Earnings Concall

Q&A Highlights:

• [00:11:53] Madhav Marda of Fidelity asked about the global carbon black scenario. Kaushik Roy MD said that in the current scenario Russia is supplying to Europe and US. However, the customers from Europe and US are looking at other options also, which is good for PCBL.

• [00:15:08] Vishal Prasad at VB Capital enquired about the company’s battery chemical update. Kaushik Roy MD said it’s part of PCBL’s specialty chemical portfolio. The company’s research team is working on it and some progress has been made. The company expects the products to be out soon.

• [00:16:09] Vishal Prasad at VB Capital queried about the opportunities in the battery chemical area. Kaushik Roy MD replied that as more EV chemicals come on road, battery chemical will be a requirement for auto and battery manufacturers. Currently the EV vehicle percentage is very less, but it’s likely a fast growing market.

• [00:20:27] Aditya Khetan with SMIFS enquired about correcting carbon black prices, if it’s related to RM prices or demand impact. Kaushik Roy MD replied that PCBL is immune to RM cost increase or decrease. The company focuses more on the demand side. However, demand is driven by the market.

• [00:21:38] Aditya Khetan with SMIFS asked about any near term pain in demand in Southeast Asia. Kaushik Roy MD clarified that demand globally will be strong, with Asia being very strong. PCBL is geared up to capture the growth that’s likely to happen in South Asian and US markets. However, Europe remains a challenge.

• [00:22:27] Aditya Khetan with SMIFS enquired about the volume increase and utilization of the current Chennai plant started in 4Q23. Kaushik Roy MD said in 1Q23, PCBL is likely to utilize about 40-50% of the capacity, which depends on approval process of customers and the time required.

• [00:25:53] Chintan Chheda at Quest Investment asked about the trajectory of specialty carbon black in FY24, with record high volume in FY23. Kaushik Roy MD answered that the company is expecting further growth going forward as the Mundra line is about to start operation.

• [00:27:12]  Chintan Chheda at Quest Investment enquired about coaltar prices in China correcting and if due to that PCBL is seeing any pressure on the spreads in the export market. Kaushik Roy MD replied that as it’s not a direct RM for PCBL, there isn’t any pressure and not a cause of concern.

• [00:29:12] Varship Shah of Envision asked why PCBL’s volume had a hit in FY23, while the volume growth for tire industry was 10%. Kaushik Roy MD clarified that FY23 was unusual with volatility impacting the crude based RM to tire industry. In 1Q and 3Q, there was inventory friction in tire industry which negatively impacted PCBL. In FY24, PCBL expect to cross 500,000 tons comfortably.

• [00:40:40] Sanjesh Jain of ICICI enquired about the mix of capacity consumption from Chennai facility, if it’s more tiled towards export and implication on overall blended spread. Kaushik Roy MD said the mix is for both domestic and international and will depend on how fast approval is got from different customers. Margins are equally healthy for international and domestic.

• [00:45:43] Sanjesh Jain of ICICI enquired if silica would become a challenge for PCBL going forward as more percentage in tire is replaced by carbon to silica. Kaushik Roy MD clarified that silica cannot be utilized beyond a certain percentage and properties of both are quite different, so it’s not a challenge.

• [00:50:12] Dhiral Shah at Phillip Capital asked about debt outlook and the peak debt by March 2024. Kaushik Roy MD said that good part of capex is already incurred. If crude remains and current levels, PCBL does not expect any increase in gross debt.

• [00:54:28] Anupam Agarwal of Lucky Investment asked about the timeline for the commissioning of the second phase of PCBL’s Chennai plant. Kaushik Roy MD replied that about 50% is complete and the rest trials are going on. Within 3 months, PCBL will be formally commissioning it.