Angel Broking is bullish on Orchid Chemicals and has recommended buy rating on the stock with a target price of Rs 270 in its November 2, 2011 research report.
Angel Broking is bullish on Orchid Chemicals and has recommended buy rating on the stock with a target price of Rs 270 in its November 2, 2011 research report.
"Orchid Chemicals (Orchid) reported in-line numbers for 2QFY2012. Going forward, for FY2012, management has guided 25% revenue growth to US$500mn, EBITDA margin at ~24% and EPS of Rs 30 on current equity. The company plans to raise Rs 1,000cr primarily to repay FCCBs due in February 2012; the balance amount would be used to repay debt and pursue organic and inorganic opportunities. For the quarter, on a consolidated level, Orchid reported net sales of Rs 459cr (Rs 413cr), up 24.6% yoy. The company's gross margin dipped by 240bp yoy to 50.9%; however, OPM expanded by 3.8% to 21.2%, much lower than expectation of 17.4%. The rise in operating profit was on account of muted rise in other expenses, which dipped by 6.8% yoy during the quarter. Further, higher interest expenses during the quarter led to a dip in net profit, which came in at Rs 20.7cr vs. our expectation of Rs 39cr."
"We expect Orchid to post net sales of Rs 2,143cr with EBITDA margin of 21.8% in FY2012E. The stock is currently trading at 6.1x FY2012E and 4.7x FY2013E earnings. We maintain our Buy rating on the stock with a revised target price of Rs 270," says Angel Broking research report.
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