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Research
Orchid Chemicals - 4QFY2012 Result Update - Angel Broking
Posted On : 2012-05-21 11:09:23( TIMEZONE : IST )
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 Rs.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 Rs.17cr vis-Ã -vis expectation of Rs.36cr.
Outlook and valuation: We expect Orchid to post net sales of Rs.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 Rs.178.
