PCBL - Diversifies Into Other Chemicals With A Major Acquisition: IDBI Capital

IDBI Capital Report

PCBL Ltd. announced acquisition of Aquapharm Chemicals Pvt. Ltd. for Rs 38 billion (valuing at nine times FY23 enterprise value/Ebitda, 3.8 times price/book value).

The acquisition of Aquapharm Chemicals marks PCBL’s foray into global specialty segments of water treatment chemicals and oil and gas chemicals –unrelated to existing carbon black business.

The transaction will be financed through a mix of internal accruals and external funds. Aquapharm Chemicals’ FY23 sales were Rs 20 billion, Ebitda of Rs 4 billion and profit after tax of Rs 3 billion.

We will incorporate the impact of this acquisition after all regulatory formalities are complete.

Meanwhile, we introduce FY26 forecasts in this report and now value the stock at price-to-earnings ratio of 12 times FY26 earnings per share (earlier 12 times FY25E) and derive a target price of Rs 268 (earlier Rs 233).

Given the recent run up in share price, we downgrade the stock to a 'Hold' ('Buy' earlier).

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