Orchid Chemicals can move to Rs 180: SP Tulsian

Tulsian told CNBC-TV18, "Orchid Chemicals you cannot write-off this company which is amongst the top-15 pharmaceutical companies in the country having presence in 70 countries and having good active pharmaceutical ingredient (API) and formulations making units, they have a very strong presence in the Cephalosporin market. So taking all this into account and if you go by the financials of the company for FY12 with a topline of 1,900 crore, I don’t think that there are any concerns on the operating profit level because there is no point in taking the PAT of the company for FY12 because there were lot of maybe about Rs 80 crore write-back of the tax or maybe the refund of income tax and no so much forex gain and losses, so much other exceptional items and all that.”

He further added, “I am focusing purely on the operating profits, which has been very much in line but the interest cost to the extent of about Rs 180 crore has eaten away the PAT or spoiled the party and the EPS of 14-15 posted by the company for FY12 may not truly reflect the working of the company.”

“As I said that income tax refund of Rs 80 crore, exceptional losses, the forex gain and losses, so it is better to focus on the operations and taking that into account, even considering the FCCB liability and all kind of debts prevailing in the books of the company, in my view stock seems to have bottomed out.”

“If one can this stock may not for the traders to take a daily call or maybe the call to play with one or two weeks horizon and all that but seems to be a perfect fit for the investors. Again this reminds me of the Wockhardt, four years back it used to rule at Rs 75 and today it is ruling at Rs 880. So I am not putting this company in the same category but yes, I am holding quite a positive view on the stock with a view of about 2-3 years and seems to have bottomed out but considering all these things, expecting that share can give a 50% return and can move to about Rs 180 in next twelve months or so.”

Disclosure: I have no holdings or interests in the above stock.