Buy Oriental Carbon & Chemicals ; target of Rs 1300: ICICI Direct

ICICI Direct's research report on Oriental Carbon & Chemicals

Oriental Carbon & Chemicals (OCCL) reported a steady Q4FY18 performance. Net sales for the quarter came in at | 89.8 crore, up 9.4% YoY. EBITDA in Q4FY18 was at | 24.1 crore with corresponding EBITDA margins at 26.9% (down 340 bps YoY) EBITDA margins in Q4FY18 came in muted primarily tracking MTM on forward forex contracts (~| 2 crore), adjusting for which it was in its normal range of 28-30%.

Outlook

Going forward, with robust demand prospects and incremental capacity in place, we expect sales & PAT to grow at a CAGR of 10.2% and 21.3%, respectively, in FY18-20E. We value OCCL at | 1300 i.e. 16x P/E on FY20E EPS of | 81.1/share and assign BUY rating on the stock.