Bull therapy 101-thread for technical analysis with the fundamentals

Philip carbon black…

wyckoff reaccumualtion…

well this is a discovered story already…
so whats new…
i think 3 things which can make the market give a little bit more valuations to the company
are…
1.improving revenue mix wherein the specialty carbon black has been steadily increasing, with better margins than the commodity …
2.raw material prices a pass through to the customers plus price hike done for the tyre industry
3.capacity expansion- a.brownfield- expanding its Mundra capacity by 56k
tonnes by Q3FY19 and increasing specialty carbon black capacity at Palej
plant by 32k tonnes by Q2FY20[ the 32k tonnes expansion of specialty carbon black is likely to come online in 2 phases with the first line of 12,000 MT to come online by end of Q4FY19 and another line of 20,000 MT to come online by Q2FY20]
Also the company incremented its capacity by 43k tonnes by debottlenecking exercise which has been completed already in fy18.
Now, this incremental capacity[43+56+32KT] has a higher share of speciality grade CB lines (44 KT out of 127KT) with overall share of speciality grade CB increasing from 4% in
FY18 to ~8% in FY20. Speciality grade carbon black EBITDA margins are to the tune of ~4-5x normal grade CB that will aid improvement in EBITDA margin and structural uptick in earnings, going forward.
capex for brownfield expansion- 450cr
b.greenfield- 1.5lakh tonnes pA is planned , for which land acquisition location is yet tobe finalized… no time line mentioned on this, and a estimated capex of 600cr for this …

talking with yoy Q1 numbers, 26.4% inflation of expenditure , 1% volume growth , 33% sales growth , 68% ebitda growth and improvement of ebitda margin to 21.2% by 439bps, PAT growth was at 102%…

everything was a compounded effect of better margin revenue mix, pass through of raw material prices to the customer and additional annual price hike , and ofcourse incremental demand form the indian tyre industry , after imposition of anti dumping duty on tyres …
the demand grown continues to be at the same pace in india and globally and is expected to grow at a rate of 8.3cagr annually [globally] …

what adds pricing power to this segment of the industry is the fact that, the chinese are losing their cost controlled production edge…Majority of chinese manufacturers use the carbon black oil route to manufacture carbon black and reduction in chinese steel production has led to shortage of Coal Tar which used to derive CBO, thereby increasing CBO prices…
in case of the already high margin nature of the speciality CB, the growth is expected to be accelerated from 2.7% to 3.5% over the next few years, mainly headed by plastic industry consumption…

domestic and global demand supply gap is intact and imo is going to be widened till 2020…
No new capacity expansion of any other CB players i noted at the moment…

hence i believe, the company is poised for the next leg of growth in fy20 , and a wyckoff reaccuualtion in fy19 makes a lot of sense in the charts…

disclaimer… not invested, yet, tracking, waiting for a phase c change of character of a final shakeout if conducted, to enter…