PCBL’s share price rose over 6% to touch a 52-week high in Wednesday’s trading session after the company acquired Aquapharm Chemicals for ₹3,800 crores. The share price of PCBL today opened at ₹261.95 each on BSE. The stock price of PCBL today touched an intraday high of ₹269.85 and a low of ₹260.15 each.
According to technical analysts, the share price of PCBL is in a strong upward trend, and after a two-day break, prices have resumed their ascent in today’s session.
“We are seeing a strong volume based move which bodes well for the bulls. expect this uptrend to continue as long as possible ₹280 can be tried, and ₹255 is likely to act as support,” said Rajesh Bhosale – Equity Technical and Derivative Analyst, Angel One.
According to Ruchit Jain, principal research analyst at 5paisa, the broader trend for the PCBL stock is positive. The price move up was supported by good volumes and therefore, the move up could continue. Investors with existing long positions can ride the trend. The 20 DEMA support for the stock is now placed around Rs. 230.
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In an exchange filing, the company stated that the PCBL Ltd board of directors has given its in-principle approval for the purchase of 212,172 shares of Aquapharm Chemicals Private Limited, either directly or through one of its subsidiaries, for a total consideration of ₹3,800 crore, or 100% investment.
“The Proposed Transaction will be funded through a mix of internal accruals and external fundraising by the Company and/or its subsidiaries/associates. This acquisition of ACPL marks the Company’s foray into global specialty segments of Water Treatment Chemicals and Oil & Gas Chemicals and it is the first milestone in realizing the vision of creating a multi-platform global specialty chemicals business portfolio,” the company said in its exchange filing. .
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In its most recent report, domestic brokerage JM Financial stated that PCBL’s acquisition of Aquapharm Chemicals for a cash consideration of ₹3,800 crore represents a critical turning point in the company’s evolution into a major player in the specialty chemicals industry.
JM Financial maintains that Aquapharm has sufficient capacity to increase its current capacity of around 3,300 tonnes, given PCBL’s apparent intention to increase its capacity for green chelating agents. The brokerage maintained its BUY rating on PCBL with a target price of ₹290 until further clarification is obtained regarding the debt/equity structure to finance the acquisition, as well as the capex and growth plans for the acquired entity. The company’s valuations and finances have not changed.
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“Management stated that the valuation implies about 9.1x multiple on current EBITDA and 8.5x multiple on FY25 EBITDA. This, we believe, is a bargain deal for a world-leading differentiated chemicals player with several new and innovative chemistries and is in sharp contrast. to the 15-20x multiples commanded by other specialty chemical companies.
The 8.5x FY25 EBITDA multiple implies FY25 EBITDA to be roughly approx ₹450 crores. Even if we assume that the transaction is fully financed by debt (at ~10% interest cost), the acquired entity would still have a PBT of approx. ₹70 crores. This rough calculation of ours gives further confidence to management’s guidance for the transaction to be EPS and EBITDA accretive one year after the acquisition,” explained JM Financial in its report.
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Updated: 29 Nov 2023, 11:12 IST