Buy Oriental Carbon & Chemicals; target of Rs 1550: ICICI Direct

ICICI Direct' research report on Oriental Carbon & Chemicals

Oriental Carbon & Chemicals’ (OCCL) performance in Q2FY18 was a tad below our expectations primarily driven by slower sales volume off take and appreciation of the rupee. OCCL reported net sales of RS152.2 crore in H1FY18, up  4.9% YoY, solely driven by volumes Operational efficiencies have begun to kick in on the expanded  production base with H1FY18 EBITDA coming in healthy at RS48.0  crore (up 11.1% YoY) with corresponding EBITDA margins at 31.5%,expanding 170 bps YoY. PAT in H1FY18 came in at RS 27.0 crore

Outlook

We expect sales & PAT to grow at a CAGR of 8.9 % & 15.3 %, respectively, in FY1 8E - 20 E. With certainty of operations & commissioning of new facilities we roll over our valuation to FY 20 E and value OCCL at RS1550 i.e. 20 .0x P/E on FY 20 E EPS of RS 77.5. We maintain our BUY rating on the stock. For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.