Buy Omkar Speciality; target of Rs 165: Mehta Equities Moneycontrol (23/2/ 2013)
Mehta Equities is bullish on Omkar Speciality chemicals (OSCL) and has recommended buy rating on the stock with a target price of Rs 165 in its February, 2013 research report.
"OSCL is a Mumbai based leading Manufacturer and Producer of Specialty Chemical Intermediates, promoter by Mr Pravin. Herlerkar. It has a diverse portfolio of over 100 products, both organic and inorganic compounds used in different industries like pharmaceutical, glass, agrochemicals, poultry, paints and dyes, electroplating, textiles, cosmetics and ceramic. The company is a leader in niche value-added organic as well as inorganic chemicals derived from iodine, molybdenum, selenium, cobalt and tartaric acid.
Result Update Q3FY13: Omkar speciality has reported a better than expected performance for the Q3FY13, which was inline with our expectations. Topline grew up by 12% to Rs 56.99 Cr from Rs 50.68 Cr on QoQ basis mainly on the back of increase in export revenue. EBITDA remained flat in value terms from Rs 9.50 cr to Rs 9.51 Cr while margins wittinessed pressure from 18.7% to 16.7%. PAT margins also witnessed pressure mainly on the back of higher depreciation and financial cost. Margins were about 9.3% vs 11.6% on QoQ basis.
MView: Going forward we believe that the performance will be backed by capacity growth which is inline with our expectations. We see very less small pharma intermediaries having fundamental growth potential to grow more than the industrial growth and Omkar is one among the best. On valuation parse at the current market price of Rs 128, the stock is trading at PE of 9x times to its FY14E earnings of Rs 13.8. Considering the above rationale we expect the performance to translate healthy growth by quarter. Having diversified products and diversified customer base growth phase will be inline with the expansion plans. Hence we continue to remain positive and expect healthy gains from the current levels with a target of Rs 165 with a 9-12 month investment perspective," says Mehta Equities research report.
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