Omkar Speciality Chemicals Ltd -- OSCL


(Changu Mangu) #750

Dear Santosh. Fingers crossed. I hope there is a dramatic downward reaction from people who were holding only for demerger. Waiting with arsenal to deploy but only if it falls dramatically. Happy pickings mate! @giridesh3 Would you concur?


(Akhil) #751

Which price range are you looking for? Would love to see everyone’s calculations.


(Changu Mangu) #752

Bhai. Price target is not allowed :slight_smile: Only thing I can say is the EPS before exceptional was the 15.01 for year ending FY 17. It has been trading at some 8 PE range till recent past while there were big clouds over it. Now if it came dramatically lower than the recent past PE then it would make some sense to take a stake right?


(Sd) #753

Thanks for your reply.
This is into T - segment so understand that delivery needs to be taken

Request Girish ji to share his views.


(Changu Mangu) #754

Yes. Delivery will have to be taken.


(Kavin) #755

Just a caution here . PE may not be a good measure to work with . Debt is too high for Omkar Speciality chemicals. somewhere around 217 cr of debt ( including promoter debt ).


(nkgambhir) #756

Now that the price of OSCL has dropped by more than 50% , the promoters might have to pledge more of their stake to maintain the pledging account.


(diva12b) #757

Out of the total debt in company’s book… around 60cr is given as interest free unsecured debt by promoters…and this may get converted to equity in future…even if they convert @ 150rs( @10pe…EPS:15)…there will be max around 13% dilution… Hence only around 150cr is external debt…it is at comfortable level compared to prevailing ebitda …all v need to focus is there shouldn’t be any incremental debt at least for next couple of years ( comments frm mgmt) and they should work om their operational cash flows…fundamentals of their business seems to be strong… …


(Sd) #758

Hi @valuestudent
Now that it’s available at PE of 6 (LC), what’s your take on this?..can person with risk appetite look this as an opportunity?


(Changu Mangu) #759

I am still waiting. Lets see the depth. Lots of sellers and not many buyers right now since it delivery needs to be taken. So better to test the depth in my opinion.


(8sarveshg) #760

Hi,

I think you have wrongly calculated the EPS before exceptional. You have excluded the impact of exceptional loss but have included the impact of tax benefit on account of the exceptional loss.

See the PBT before exceptional items for FY17 is just 32 cr. Now if I take into account the tax rate of 25% also, the PAT is just 24 cr which will lead to EPS of ~11.5 Rs and not 15 Rs considering a share base of 2.05 cr.

The P/E will go up to the equivalent extent.

S


(Changu Mangu) #761

@8sarveshg they do get the benefit of the tax on the exceptional loss so why would I not include it? They also get other tax benefits every year related to their r&d… so we have to work with what we get.
Would love to learn something if I am still not getting it.


(nkgambhir) #762

I just referred to the latest issue of Capital Market magazine, which gives the q4 and fy17 numbers without the demerger adjustments : q4 : Sales= 91 crores NP=17.25 crores and FY17 : Sales=345 crores NP= 36.56 crores EPS= 17.8 The book value is 40.2 and these numbers are for Omkar , without LASA.They have not taken the "deferred tax liability " credit of 1.67 crores into consideration. So, I think now th picture is clear. The market will value OSCL for a BV of 40.2 and an EPS of around 18. LASA`s EBITDA is around 44 crores, so I think we can expect an EPS of around 10. The BV we will know only after the numbers are announced. OSCL BV has gone down from 88 to 40. Let us see what BV LASA starts with.The market has been valuing the standalone OSCL at aproximately twice the book value of 88. Now that the BV has come down to 40 so 80 to 90 is the new value, till the q1 numbers are announced. OSCL may go down further due to technical reasons such as selling by those who bought with borrowed money, but every fall will be an opportunity to buy something that can double your money in six months.

disclosure : I am invested in Omkar.


(8sarveshg) #763

Your numbers are incorrect sir, I just showed in post above the right way to calculate EPS for OSCL which is around 11.5 Rs. for FY17.


(nkgambhir) #764

8sarveshg

I have not made any calculations on my own, I have just posted the numbers as posted in capital market magazine.While they have added the “prior period tax adjustment” and the “MAT credit entitlement” , they have not added the benefit due to “deferred tax liability” .This is legitimate , in my view and gives an EPS of 17,6 for FY17 for Omkar ( standalone).


(8sarveshg) #765

Sir, I don’t know what is the problem in understanding here.

the PBT of the company itself is 32 cr which means a PBT of 15.6 Rs per share, how can the adjusted EPS i.e. PAT per share be more than PBT per share?

Capital market magazine may have just be using a software to create a formula but its wrong.


(nkgambhir) #766

You are talking purely about the profits made from the operations of the company. But the company has also received some credits such as prior period tax adjustment , MAT credit etc. Now these are amounts that the company has debited in previous quarters that it is now adding back. It is money that has been earned by the company and there is nothing wrong in ading it to the profits.


(nkgambhir) #767

Capital Market is a good magazine and it enjoys a very good reputation in the investor commuity. If it had been using an algorithm/software for the data bank, then it would not have left out the deferred tax liability and also would have published the figures as given out by the company after adjusting for demerger.


(saumilshah) #768

Has anyone calculated the interest cost of 2017 and 2016?
if i am not wrong promoters specified that they have sold shares & all the money has been invested in the company as interest free loan.
If thats the case then why interest cost has gone up from 16.5crore to 19.5 crore?
Infact interest cost should have gone down.


(marathon_runner) #769

I believe interest cost went up because of two possible reasons:

  1. I see Long Term Borrowings going up from 79.22 crores 124.60 crores for FY17 for OSCL.
  2. They de-pledged most of the shares just few days back. So interest cost would have accrued until recently. We may see interest cost reduction resulting from interest free loan from promoters by next quarter. Repayment of debt principal should also help.

Please feel free to let me know if I am missing something.