Buy Omkar Speciality; target of Rs 105: Mehta Equities Moneycontrol (13/08/2012)
Mehta Equities is bullish on Omkar Speciality Chemicals and has recommended buy rating on the stock with a target of Rs 105 in its August 12, 2012 research report.
Mehta Equities is bullish on Omkar Speciality Chemicals and has recommended buy rating on the stock with a target of Rs 105 in its August 12, 2012 research report.
“Omkar Speciality is a leading Mumbai based Midcap pharma and specialty chemicals company 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.”
“Omkar speciality has reported healthy numbers in Q1FY13, which are in line with our expectations. Topline has grown by 21% from Rs 42.5 Cr to Rs 51.6 Cr on YoY basis. The healthy growth was mainly on the back of commercialisation of the new capacity. Earlier to this, the capacity was around 950 mtpa in FY12 and as on June 2012 the capacity stood at 1700 mtpa. New capacity is running at 50% utilisation. Increase in export revenue also helped Omkar to report the healthy numbers. Last year the total exports were around Rs 26 Cr FY2012 against Rs 20 cr this quarter. We expect the export revenue to cross our expectations which are around Rs 75 cr for FY13. During the quarter Omkar has launched 2 new exports oriented products which have contributed to the growth in export segment. To keep the pace on, Omkar has also planned to launch 2-3 more export oriented products which will drive the export segment in FY13 & FY14. EBITDA has also grown by 21% from Rs 8.24 cr to Rs 9.96 Cr which was mainly because of lower Cost of Raw Materials to the percentage to sale witnessing a drop from 65% to 55% on YoY basis. EBITDA margins stood at 19.3% and expect to maintain the same going forward. Profitability has also grown from Rs 3.97 Cr to Rs 4.88 Cr and margins stood at 9.4% and expect to remain in the range between 9-10% for FY13.”
“We believe Omkar is a good play in small pharma space for investors with a 1-2 year investment perspective. At the current market price of Rs 83, the stock trading 8.5 & 6.3 times to its FY13E & FY14E earnings. Considering the above rationale we expect the performance to translate Healthy growth quarter by quarter. Omkar's portfolio has diversified product and diversified customer base which will keep the growth phase intact inline with expansion. Hence with a clear picture on fundamental growth we expect 27% potential upside from the current levels. We recommend investors to buy Omkar with a target price of Rs 105,” says Mehta Equities research report.
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