According to reports from Moneycontrol, Prabhudas Lilladher has downgraded PCBL Chemical to a 'HOLD' rating with a target price of Rs 302. The brokerage values the stock at 18x December 2027 EPS, reflecting concerns about the company's near-term prospects amid challenging market conditions. The downgrade signals a more cautious outlook for the chemical manufacturer, with the firm's analysis pointing to significant headwinds from increased competition due to cheaper imports and a persistently weak demand environment.
As reported by Moneycontrol, PCBL Chemical reported consolidated revenue of Rs 18.5 billion in Q3FY26, representing a 15% quarter-on-quarter decline and 8% year-on-year drop. The revenue decline was driven by a 13% QoQ and 2% YoY decline in carbon black volumes and a sharp fall in realization to Rs 104 per unit. Operating leverage also declined, leading to EBITDA per ton falling to Rs 13,855 from Rs 19,868 in Q3FY25. Fourth-quarter fiscal year 2026 results showed a significant year-on-year decline in both carbon black volumes and realizations, with the adverse impact of lower operating leverage resulting in substantial margin compression.
According to the research report, the power segment witnessed a 27% QoQ decline in revenue to Rs 779 million, largely due to lower carbon black production. The Aquapharm (Chemicals) segment reported a 17% sequential decline in topline amid geopolitical tensions affecting supply chains. The pressure on realizations is anticipated to persist in the near term, exacerbated by the ongoing influx of cheaper imported goods and subdued market demand. Margins in the Aquapharm segment are also projected to stay under pressure, despite management guidance of 20% volume growth in FY27.
As reported by Moneycontrol, Prabhudas Lilladher expects carbon black volumes to grow by 2% in FY26 and 11% in FY27, supported by new capacity additions. However, EBITDA per ton is likely to remain subdued at approximately Rs 15,545 in FY26 and Rs 17,100 in FY27, reflecting sustained pricing pressure and continued inflow of cheaper imports. The stock currently trades at 16x FY28E EPS, with the company facing challenges from weak demand and competitive pressures that are expected to persist in the medium term. Realization is expected to remain under pressure in the near term due to weak demand and continued inflow of cheaper imports.
