PCBL Limited

The decline in crude prices during Q1 FY24 had a notable impact on PCBL Limited's revenue and EBITDA. Specifically, the average crude price dropped from USD 97 to USD 82 year-on-year, contributing to a decrease in revenue. Despite this, PCBL reported a standalone revenue from operations of INR 1,297 crores and an EBITDA of INR 214 crores, marking the highest EBITDA in the company's history. The company effectively managed its inventory levels through dynamic sales forecasting, which mitigated potential inventory losses typically associated with falling crude prices. This strategic approach allowed PCBL to maintain strong margins and achieve an EBITDA margin of 16.5%, despite the challenging market conditions.

In PCBL Limited's Q1 FY24 earnings conference call, key financial highlights included a standalone revenue from operations of INR 1,297 crores, reflecting an 8% year-on-year increase in sales volumes, totaling 118,000 tons. The company achieved a consolidated revenue of INR 1,348 crores and reported an EBITDA of INR 214 crores, marking the highest EBITDA and profit before tax (PBT) in its history at INR 156 crores. The EBITDA margin stood at 16.5%. Additionally, power generation increased to 156 million units, up from 144 million units in the same quarter last year. These results underscore PCBL's strong market position and operational efficiency amidst ongoing economic challenges.

In Q1 FY24, PCBL Limited's consolidated sales volumes totaled 123,000 tons, with a significant breakdown between domestic and international markets. Domestic sales accounted for 82,000 tons, while international sales contributed 41,000 tons. This distribution highlights PCBL's strong position in the domestic market amidst growing demand in both OEM and replacement segments. The company continues to focus on expanding its market share, particularly in Western Europe, to further enhance its international presence.

PCBL Limited is proactively addressing global demand challenges and supply chain changes in the carbon black industry through several strategic initiatives. The company is focusing on strengthening its supply chain and improving its product mix to adapt to shifting market dynamics. This includes expanding its specialty black capacity to 92,000 tons and launching new grades in specialty products, which positions PCBL to meet the growing demand in both OEM and replacement segments. To mitigate risks associated with global demand uncertainty, particularly due to high inflation in developed economies, PCBL is implementing dynamic inventory management based on sales forecasts. This approach helps minimize potential inventory losses from fluctuating crude prices. Additionally, the company is targeting market share expansion in Western Europe, which presents a significant opportunity for growth as demand patterns evolve. Overall

PCBL Limited's long-term growth prospects for its specialty black segment appear robust following recent expansions. The company has successfully increased its specialty black capacity to 92,000 tons, with plans to further enhance production capabilities. This strategic move aligns with the anticipated growth in the tyre industry, projected at 9%-10% annually, which is expected to drive demand for specialty products. Moreover, PCBL is actively launching new grades in specialty products and expanding its customer base, particularly in the OEM and replacement markets. The company's focus on premiumization of its product portfolio positions it well to capitalize on evolving market demands. With a strong emphasis on research and development, PCBL aims to sustain its growth momentum in the specialty black segment, ensuring it remains competitive in both

PCBL Limited's new Tamil Nadu facility currently operates at approximately 45% capacity utilization, having produced around 6,300 tons since its commissioning in mid-April. The company anticipates ramping up production further as it receives necessary approvals from tyre customers. Future expectations indicate that the facility is projected to achieve break-even at this capacity level once all remaining lines and cogeneration power plants are fully operational. Overall, PCBL aims to enhance production capabilities in line with the growing demand in the tyre industry, which is expected to see high single-digit growth rates of 9%-10% in the coming years.