PHILLIPS CARBON BLACK

India’s largest carbon black manufacturer, despite a fall in carbon black prices during the quarter, a 20% increase in sales volume helped the earnings. Net sales for Q3FY17 was at Rs.537 crore, up 5% (YoY). Keeping the costs steady, it improved its EBITDA by 36% to Rs.76 crore. Margins improved from 12% to 16%.

The company’s interest cost came down 14% but tax outgo jumped up almost 3 times. It ended the quarter with a net profit at Rs.17 crore, up 3.4 times, which is 74% of FY16 net profit of Rs.23 crore.

The company’s fortunes are linked directly with that of the auto and tyre sector and both doing well, bodes well. But on the raw material front there could be some concern. It uses either crude oil or coal tar through distillation which is a byproduct generated through the processing of coking coal. With crude and coking coal prices on the rise, we could see costs rise though it can be mitigated with the volumes continue to rise.