CRISIL maintains fair value of Rs 110 to Omkar Speciality

858 Investors following Omkar Special. Share this News with them.

0

Like this story, share it with millions of investors on M3

CRISIL maintains fair value of Rs 110 to Omkar Speciality

CRISIL Research has come out with its report on Omkar Speciality Chemicals. The research firm has maintained the fundamental grade of 3/5 to the company in its February 2, 2012 report.

Post your opinion here

 

0

Tweet

Share on Tumblr

Omkar Special BSE | NSE 31/05/12 Are Mutual Funds betting on Omkar Special?

CRISIL Research has come out with its report on Omkar Speciality Chemicals . The research firm has maintained the fundamental grade of 3/5 to the company in its February 2, 2012 report.

Omkar Speciality Chemicals Ltd's (Omkar's) Q3FY12 results were broadly in line with CRISIL Research's expectations. Revenue and EBITDA grew 80% and 87% y-o-y to Rs 441 mn and Rs 88 mn respectively. We believe that growth was driven by demand from both existing and new clients the company added last quarter. We remain confident of the sustainability of its growth momentum. EBITDA margin was slightly lower than our estimates because of higher-than-expected employee costs. PAT margin was lower than our estimates because of higher interest costs resulting from unrealised forex losses on the company's FCNR debt. We will provide further clarity post our management call. We maintain our fundamental grade of 3/5.

Q3FY12 result analysis
• Revenue grew by 80% y-o-y (+12.5% q-o-q) to Rs 441 mn, indicating sustained traction in product demand. Pharma intermediates continue to drive 75% of total sales. We believe that the sales momentum was driven by both existing and new clients the company added last quarter. Among the products, we believe that demand for organic iodide derivatives and selenium derivatives continues to be strong.

• EBITDA grew by 87% y-o-y to Rs 88 mn driven by margin expansion of ~75 bps to 19.9%. However, it was slightly lower than our expectations due to higher-than-expected employee costs.

• PAT grew by 90% y-o-y to Rs 40 mn. Though margin expanded by ~50 bps to 9.1%, it was lower than our expectations because of higher-thanexpected interest costs and lower EBITDA margin. Higher interest cost was due to unrealised losses on the company's FCNR debt due to rupee depreciation. The company has booked around Rs 3 mn of unrealised loss this quarter.

Valuation: Current market price has strong upside
We continue to use the discounted cash flow method approach to value Omkar. We maintain our fair value estimate at Rs 110 per share. At the current market price of Rs 60, the valuation grade is 5/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

© CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"