Buy Orchid Chemical; target of Rs 373: Angel Broking

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Buy Orchid Chemical; target of Rs 373: Angel Broking

Angel Broking is bullish on Orchid Chemical and has recommended buy rating on the stock with a target of Rs 373 in its August 12, 2011 research report.

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RELATED NEWS Buy Tata Motors; target of Rs 1176: KRChoksey Buy Bilcare; target of Rs 831: Sushil Finance Buy Hindalco; target of Rs 193: Sushil Finance ALSO READ See previous views by Angel Broking See what other Experts & Brokerages are saying about Orchid Chemical See messages about Orchid Chemical Orchid Chemical BSE | NSE 30/05/12 Are Mutual Funds betting on Orchid Chemical?

Angel Broking is bullish on Orchid Chemical and has recommended buy rating on the stock with a target of Rs 373 in its August 12, 2011 research report.

"Orchid Chemicals (Orchid) reported below-expectation numbers for 1QFY2012. Going forward for FY2012, management has guided 25% revenue growth to US$500mn, EBITDA margin at ~24% and EPS of Rs30 on current equity. The company plans to raise Rs1,000cr primarily to repay the FCCBs due in February 2012, and the balance amount to be used to repay debt and pursue organic and inorganic opportunities."

"For the quarter, on a consolidated level, Orchid reported net sales of Rs413cr (Rs337cr), up 22.5% yoy. The company's gross margin expanded by 62bp yoy to 48.6%, while OPM dipped by 4.7% to 13%, much lower than expectation of 22.1%. The squeeze in operating profit was on account of the substantial rise in other expenses, which rose by 50.4% during the quarter. Further, a high increase in the company's interest expenses during the quarter led to a dip in net profit, which came in at Rs16.7cr vs. our expectation of Rs50cr."

We expect Orchid to post net sales of Rs2,143cr, with EBITDA margin of 21.8% in FY2012E. The stock is currently trading at 9.9x FY2012E and 7.6x FY2013E earnings. We maintain our Buy rating on the stock with a revised target price of Rs373," says Angel Broking research report.

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