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Orchid Chemicals (Orchid) reported lower-than-expected numbers for
4QFY2012. Going forward, for FY2013, management has guided for revenue
growth of 15-20% and operating profit growth to be more than top-line growth.
Although the stock has declined sharply post its 4QFY2012 results, given the
valuations, we maintain our Buy view on the stock.
Lower-than-expected performance: For the quarter, on a consolidated level,
Orchid reported net sales of `485cr, a decline of 8.1% yoy. The company’s gross
margin expanded by 638bp yoy to 52.5%; however, OPM remained flat at 9.2%,
just in-line with 4QFY2011 OPM. The expansion in OPM came lower than the
expansion in gross margin on account of lower growth in the top line. This along
with higher interest expenditure led to net profit coming in lower than our
expectation at `17cr vis-à-vis expectation of `36cr.
Outlook and valuation: We expect Orchid to post net sales of `2,434cr, with
EBITDA margin of 17.7% in FY2014E. The stock is currently trading at 7.6x
FY2013E and 5.7x FY2014E earnings. We maintain our Buy rating on the stock
with a revised target price of `178.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Orchid Chemicals (Orchid) reported lower-than-expected numbers for
4QFY2012. Going forward, for FY2013, management has guided for revenue
growth of 15-20% and operating profit growth to be more than top-line growth.
Although the stock has declined sharply post its 4QFY2012 results, given the
valuations, we maintain our Buy view on the stock.
Lower-than-expected performance: For the quarter, on a consolidated level,
Orchid reported net sales of `485cr, a decline of 8.1% yoy. The company’s gross
margin expanded by 638bp yoy to 52.5%; however, OPM remained flat at 9.2%,
just in-line with 4QFY2011 OPM. The expansion in OPM came lower than the
expansion in gross margin on account of lower growth in the top line. This along
with higher interest expenditure led to net profit coming in lower than our
expectation at `17cr vis-à-vis expectation of `36cr.
Outlook and valuation: We expect Orchid to post net sales of `2,434cr, with
EBITDA margin of 17.7% in FY2014E. The stock is currently trading at 7.6x
FY2013E and 5.7x FY2014E earnings. We maintain our Buy rating on the stock
with a revised target price of `178.
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