Orchid Chemicals - RU4QFY2011 - Buy

Dear All,

 

Forwarding you the Result Update on Orchid Chemicals for 4QFY2011 with a Buy recommendation and a Target Price of `373 (12 months).

 

 

Orchid Chemicals (Orchid) reported strong set of numbers for 4QFY2011, closing the year higher than its annual guidance. Going forward for FY2012, management has guided 25% revenue growth to US$500mn, EBITDA margin at ~24% and EPS of `30 on the current equity. The company plans to raise `1,000cr, primarily to repay the FCCBs due in February 2012; and the balance amount would be used to repay debt and pursue organic and inorganic opportunities. We maintain Buy on the stock.

Strong set of numbers: For the quarter, on a consolidated level, Orchid reported net sales of `528cr. The gross margin expansion to 46.3% translated to OPM of 22.9% for the quarter. Boosted by lower interest and depreciation costs during 4QFY2011, net profit came in at `59cr. However, adjusting for extraordinary items the net profit stood at `63.7cr. For FY2011, net sales grew by 32.2% yoy to `1,717cr (`1,299cr). With the gross margin expanding to 49.4%, the OPM came in at 20.5% for the year. The net profit stood at `156.2cr (`339.3cr). However, adjusting for the extra-ordinary items due to the sale of injectables business to Hospira the net profit came in at `154.2cr compared to loss of `554cr.

Outlook and valuation: We expect Orchid to post net sales of `2,143cr, with EBITDA margin of 21.8% in FY2012E. The stock is currently trading at 10.0x FY2012E and 7.6x FY2013E earnings. We maintain Buy on the stock with a revised target price of `373.

 

Kindly click on the following link to view the Report.

 

Orchid - RU4QFY2011

 

 

If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com

With best regards,

Fundamental Advisory Desk

Angel Broking

Akruti Star,6^th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.

Call         : (91) (022) 39357600 Ext. 6865

Website  : www.angelbroking.com

 

Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.

 

 

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