Goal: ₹320
CMP: ₹250.15
In our view, PCBL’s inventory worth isn’t factoring within the worth of its lately acquired Aquapharm enterprise. Moreover, PCBL’s latest JV with Kinaltek takes it additional away from its conventional carbon black enterprise.
Aquapharm’s biodegradable chelating brokers (corresponding to GLDA, HEIDA, and PESA) are quickly changing conventional brokers (corresponding to EDTA, DTPA). Aquapharm has been ramping up its GLDA gross sales in Asia the place it has a powerful presence. Additional, foundation our understanding, it has began the approval course of for PESA within the European market. As per numerous trade estimates, the GLDA market is predicted to register about 10 per cent CAGR over the following five-seven years. With sturdy market traction for its biodegradable brokers, we consider that Aquapharm is nicely positioned to reap the benefits of such beneficial demand dynamics. We consider that with sturdy scale benefit in phosphonates (by which HEDP is the most important product) Aquapharm might register nicely above the 6-7 per cent trade income CAGR. Moreover sturdy scale benefit within the phosphonates portfolio, Aquapharm is scaling up its biocide (methylene bis thiocyanate) and polymers (phosphino carboxylic acid, polymaleic acid) product portfolio.
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Going ahead, we count on this momentum to proceed and Aquapharm might register 13 per cent/15 per cent income/EBITDA CAGR over FY24E-26E.
On the funding half, we’ve readability that PCBL would fund the Aquapharm acquisition with debt at this juncture. We construct in 10 per cent curiosity value for ₹3,500 crore debt (assuming PCBL doesn’t pay out dividend and makes use of ₹300 crore money for this acquisition)
We ascribe 25x December 2025 goal P/E a number of and arrive at ₹30/share fairness worth of Aquapharm. Therefore, our December 2024 TP of PCBL is revised to ₹320/share (from ₹290/share earlier).
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