PCBL Chemical (PCBL IN) – Company Update – Import mix turns favourable – Upgrade to ‘BUY’

The Indian carbon black (CB) market is witnessing a favourable shift in import dynamics. Imports of lower-priced Russian CB declined by ~60% during the first six months of CY26 compared with CY25, primarily due to disruptions at Russian refineries. Meanwhile, imports from China have increased, albeit at significantly higher prices of ~US$1.3/kg versus ~US$1/kg for Russian imports. Further, Chinese suppliers, like Jiangsu have announced additional price hikes, which could further increase the landed cost of imported CB into India. This evolving import landscape provides domestic manufacturers such as PCBL with greater pricing flexibility in the domestic market, potentially supporting higher realizations and EBITDA/tn. Management has guided for a 14–15% YoY increase in FY27 EBITDA/tn over FY26, implying a full-year EBITDA/tn of ~INR17,000. However, we believe the current outlook could prove conservative if Russian CB supply continues to contract and global capacities remain offline, resulting in a tighter demand-supply balance and further strengthening pricing dynamics globally. PCBL’s sensitivity to EBITDA/tn remains significant, a ~INR1,500/tn increase over our FY28 EBITDA/tn assumption of INR17,500 would translate into nearly a ~14% increase in FY28E EPS. We remain positive on PCBL and upgrade the stock to ‘Buy’, valuing it at 25x FY28E EPS, with a target price of INR391. A 10% upside to our FY28 EBITDA/tn assumptions could potentially translate into an additional ~23% upside to our target price, highlighting the strong operating leverage to improving industry pricing and spreads.