Dec 27, 2012 02:47 PM IST | Source:

Buy Omkar Speciality; target of Rs 142: Firstcall Research

Firstcall Research is bullish on Omkar Speciality Chemicals and has recommended buy rating on the stock with a target of Rs 142 in its December 26, 2012 research report.

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Firstcall Research is bullish on Omkar Speciality Chemicals and has recommended buy rating on the stock with a target of Rs 142 in its December 26, 2012 research report.
“Omkar Speciality Chemicals Private Limited was incorporated on February 24, 2005 and took over business of the Proprietorship Firm M/s. Omkar Chemicals which was in operation since 1983 with capacity of 6 MT per annum for manufacture of molybdenum derivatives. The Private Limited Company was converted into a Public Limited Company on March 18, 2010. The Company is mainly engaged in the manufacture and sale of Speciality Chemicals and Intermediates for Chemical and Allied Industries. The installed capacity was 318 MT and the product range was cobalt, selenium & iodine derivatives in addition to molybdenum derivatives. During the year 2006 -07, Company expanded the total installed capacity to 325 MT which was further increased to 375 MT during the year 2007-08. Today company’s total installed capacity increased to 750 MT.”
“The Company has recently set up a new manufacturing facility at B-34, MIDC, Badlapur, Thane, Maharashtra viz. Unit 3 with an installed capacity of 200 MT. The commercial production at Unit 3 is likely to start in the month of March, 2011. With the set up of Unit 3, our total installed capacity stands increased to 950 MT. Company is primarily involved in the production of Speciality Chemicals and Pharma Intermediates. We manufacture a range of Organic, Inorganic and Organo Inorganic Intermediates. The Inorganic Intermediates include Molybdenum derivatives, Selenium derivatives, Iodine derivatives, Cobalt derivatives, Bismuth & Tungsten derivatives and the organic intermediates include Tartaric acid derivatives and other intermediates. These products find applications in various industries like Pharmaceutical Industry, Chemical Industry, Glass Industry, Cosmetics, Ceramic Pigments and Cattle & Poultry Feeds. The Company has basic research capabilities and has recently acquired M/S. RISHICHEM RESEARCH LTD., W- 83(C), MIDC, Badlapur as a wholly owned subsidiary which is expected to provide a total R&D back-up to the Company for all its future expansion and diversification programmes.”
“Omkar Specialty Chemicals Ltd is mainly engaged in the manufacture and sale of Specialty Chemicals and Intermediates for Chemical and Allied Industries., reported its financial results for the quarter ended 30 Sep, 2012. The second quarter witnesses a healthy increase in overall sales as well as profitability on account, an enhanced Dealers network & robust infrastructural Support system. The company’s net profit jumps to Rs.57.85 million against Rs.36.18 million in the corresponding quarter ending of previous year, an increase of 59.89%. Revenue for the quarter rose 22.43% to Rs.480.42 million from Rs.392.39 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.2.95 a share during the quarter, registering 59.89% increase over previous year period. Profit before interest, depreciation and tax is Rs.115.96 millions as against Rs.84.75 millions in the corresponding period of the previous year.”
“At the current market price of Rs 127, the stock P/E ratio is at 10.93 x FY13E and 8.73 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.11.62 and Rs.14.54 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 36% and 41% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 5.01 x for FY13E and 4.14 x for FY14E. Price to Book Value of the stock is expected to be at 1.94 x and 1.59 x respectively for FY13E and FY14E. We recommend ‘BUY’ in this particular scrip with a target price of Rs 142 for medium to long term investment,” says Firstcall Research report.

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