OMKAR SPECIALITY CHEMICALS LTD â OSCL
CMP 80 MARKET CAP 157 CRORES
Book value 56.
ABOUT THE COMPANY:
Company was promoted by Mr Pravin Herlekar 30 years back to manufacture speciality products and import substitutes mainly catering to pharma and other end user industries for its products.
It has around 90 products in its basket. It is a major player in iodine, selenium, molybdenum derivatives and other products. It derives majority of its revenues by producing value added products like selenium anhydride that finds application in steroid manufacturing, 5 Iodo 2 methyl Benzoid acid used in diabetic drugs and it has plans to expand its products portfolio into HIV drugs mainly protease inhibitors.
The company has also plans to increase product range to cater to other user industries like glass, cosmetics, ceramic pigments etc.
Companyâs clients in pharma space include Cipla, Ranbaxy, Glenmark, Biocon, Dr Reddys etc and in other industries includes Clariant UK, Asahi India Glass, Suguna Poultry etc.
Exports doubled in fy 12 to 25 crores from 12 crores in fy 11. Total contribution of exports to revenues during fy 12 was around 15%.
EXPANSION PLANS
OSCL is in expansion phase to increase its capacity from 950 mtpa to 3650 mtpa over the period of fy 11 to fy 13.
The company has some subsidiaries which are likely to propel the production capacity in a phased manner.
FINANCIALS
OSCL came out with an IPO in Jan âFeb 2011 at an IPO price at 98 per share. Currently there are 1.962 crores outstanding shares of Rs 10 face value.
FY 12 ROE was around 16.
Debt as on fy 12 consisted of long term debt of 4.67 crores and short term debt of 69 crores. Cash and cash equivalents is 31.4 crores.
Period |
08 |
09 |
10 |
11 |
12 |
q1 fy 13 |
Q1 fy 12 |
Sales |
41 |
51 |
68 |
106 |
167 |
50 |
42.6 |
NP |
2.6 |
3.1 |
5.2 |
10 |
16.4 |
5.2 |
4 |
Interest |
2.1 |
3.6 |
3.74 |
5.2 |
8 |
2.27 |
1.53 |
During FY 13, Company is likely to post revenues of 220-230 crores and net profits of around 22-23 crores.
Exports during q1 fy 13 was at around 20 crores as against 26 crores for full year fy 12. During fy 13, exports are likely to cross 75-80 crores.
INVESTMENT THEME
OSCL IS A SMALL COMPANY ASPIRING TO GROW FAST IN THE SPECIALITY CHEMICALS AND API SPACE. IT HAS SHOWN GOOD GROWTH IN THE PAST AND WITH CAPACITY EXPANSIONS LIKELY TO BE COMPLETED WITHIN NEXT FEW QUARTERS, COMPANY IS LIKELY TO CONTINUE THE GROWTH SEEN IN THE PAST.
CURRENTLY THE COMPANY IS AVAILABLE AT REASONABLE VALUATIONS OF AROUND 7 TIMES FY 13 EXPECTED EPS OF CLOSE TO 11-12.
IF THE COMPANY WITH ITS BASKET OF NICHE PRODUCTS CAN CONTINUE THE SAME PACE OF GROWTH FOR NEXT 2-3 YEARS, THERE COULD BE GOOD RETURNS FOR THE PATIENT INVESTOR. I THINK EARNINGS CAN KEEP ON GROWING LOOKING AT THE STRATEGY OF THE COMPANY. AND WITH MARGINAL RERATING THAT COULD HAPPEN (DONT EXPECT TOO MUCH RE RATING), THIS COMPANY LOOKS LIKELY TO PROVIDE GOOD RETURNS.
disc: no holdings. under watchlist.