Omkar Specialty Chemicals (OSCL): Recommendation Review

We had recommended Omkar Specialty Chemicals (OSCL) in DSIJ Vol. 27, Issue No. 7 (dated March 12-25, 2012). Our recommendation was backed by OSCL’s improving financial performance, the planned capacity expansion set to boost the company’s revenues as well as its attractive valuations.

OSCL posted a stellar performance in the April-December 2011 period, where its topline and bottomline grew by 66 per cent and 63 per cent respectively. It has recently announced its foray into the pharmaceuticals sector with the acquisition of LASA Laboratory, which has been an established player in the anthelmintic/veterinary API segment with a state-of-the-art API manufacturing facility.

Since our recommendation, the stock has had a good run up, appreciating by 16 per cent to Rs 68 a share. The company’s fundamentals continue to remain intact, and our recent interaction with the management suggests that its planned capacity expansion is well on track. Therefore, we advise readers to book profits at the current levels.

Although there is enough steam left in the counter and the current valuations suggest some additional room for upward movement, we feel that booking profits would be the right strategy in the current uncertain market scenario.