PCBL Ltd. to See 5x Profit Growth in 5 Years, Says Sanjiv Goenka in Exclusive Interview | CNBC TV18

Summary

In a CNBC TV18 special, Mr. Sanjiv Goenka discusses the strategic expansion and investment plans across his group's businesses, with a focus on chemicals and carbon black sectors. He reveals a projected growth to 2 lakh crores in market cap over 30 months and outlines aggressive capex plans of 35,000 crores in 12-18 months, up to 50,000 crores in 3 years. The conversation spans topics from M&A strategies, green energy investments, to the future of IT and FMCG sectors within the group, emphasizing a debt-averse approach and an aspirational outlook.

Takeaways

• 📈 The company is entering a significant investment phase across businesses, focusing on research, capacity, and growth after a period of consolidation and reinvention.
• 💰 The group plans to spend about $35,000 crore over the next 12 to 18 months and approximately $50,000 crore over the next 3 years on capex.
• 🚀 The company has an ambitious growth target of reaching a market cap of 2 lakh crores within the next 30 months, from a current market cap of nearly $7 billion.
• 🌐 The largest expansion is expected in the chemicals and carbon black sector, with an emphasis on specialty blacks for higher margins.
• 📊 PCBL's financials show a rise from 3,244 crores in FI20 to 6,420 crores in FI24, with a margin expansion from 14% to 16%, and a projection for further growth to 17-18%.
• 💹 The company aims for a fivefold increase in profits over the next five years, from a base of 491 crores, targeting between 2400 and 2500 crores.
• 🛒 The acquisition of Aquafarm for 3,800 crores is complete, and the company is considering a combination of debt, internal accruals, and possibly equities for funding future acquisitions.
• 🌿 The company is venturing into green energy with plans to set up 3 GW of hybrid solar and wind projects over the next 2 years, with a long-term goal of 10 GW.
• 🏢 The IT business, First Source, is targeting a profit growth of 2.5 times in the next 3 years with a focus on high-margin businesses and strategic acquisitions.
• 🛒 Spencer's retail business is on track to reach cash break-even by the end of the year, with investments focused on Nature's Basket and a cautious approach to quick commerce expansion.
• 🏆 The sports business, including The Dugout franchise, has been successful, with no plans to monetize the franchise at this point.

Q & A

What is the main focus of the conversation with Mr. Sanjiv Gupta?

The conversation primarily focuses on the business strategies, expansion plans, and financial aspirations of the Adani Group under Mr. Sanjiv Gupta's leadership.

What is the current status of the Adani Group's expansion and investment plans?

The Adani Group is planning to invest significantly across its businesses, with a focus on research, capacity, and growth. They are moving from a period of consolidation to one of high growth, particularly in the chemicals and carbon black sector.

What is the projected capex for the Adani Group over the next 12 to 18 months?

The Adani Group plans to spend about $35,000 crore over the next 12 to 18 months and approximately 50,000 crores over the next 3 years.

What are the growth aspirations of the Adani Group in terms of market cap?

The Adani Group has a current market cap of almost $7 billion and aims to reach a target of 2 lakh crores over the next 30 months.

How does Mr. Gupta view the future of carbon black production at PCBL?

Mr. Gupta sees significant growth in both rubber blacks and specialty blacks, with the latter offering higher margins. He expects the profit to grow five times over the next five years.

What are the specific expansion plans for PCBL in the chemical sector?

PCBC plans to expand in chemicals through the acquisition of Aquafarm, increasing capacity in phosphonates, integrating into yellow phosphorus, and expanding in oil and gas chemicals. They also plan to enter the bio-degradable product market and cathode chemistry for EV batteries.

What is the expected change in the mix of specialty and rubber blacks for PCBL?

The specialty blacks are expected to contribute 60% of the value, with rubber blacks contributing the remaining 40%, although rubber blacks will have higher volume contributions.

How does Mr. Gupta approach debt in relation to the expansion plans?

Mr. Gupta is averse to debt and prefers to finance expansions through a combination of internal accruals, possibly some short-term debt, and equity at some stage. He maintains a debt-to-equity ratio of no more than 1.5:1.

What is the current status of the acquisition of Aquafarm by PCBL?

The acquisition of Aquafarm for 3,800 crore rupees is complete, and PCBL is looking at further M&A opportunities, though specifics are not disclosed.

What are the growth expectations for First Source in the IT sector?

First Source is expected to grow profits by 2.5 times in the next 3 years, focusing on high-margin businesses, expanding wallet share with existing customers, and investing in technology and analytics.

What is the plan for Cesc in terms of renewable energy and green initiatives?

Cesc plans to set up 3 GW of renewable energy over the next 2 years, with a long-term goal of reaching 10 GW. They are also looking into hydrogen electrolyzers and modular nuclear plants as part of their green energy strategy.