Omkar Speciality Reports A Thumping 60 Per Cent Rise In Net Profits

Speciality Chemicals manufacturer, Omkar Speciality Chemicals (OSCL) has reported a whopping 61 per cent (yoy) rise in its net profits to Rs 4.78 crore for the quarter ended March 2012 as against Rs 2.97 crore in the corresponding quarter of the previous year.

The net sales have grown by 32 per cent to Rs 41 crore in Jan-March 2012 as against Rs 31.14 crore last year. On a sequential basis, however the sales have declined by 7 per cent from Rs 44.15 crore in Dec 2011. However, the margins on the operating and net profit level have improved considerable which is worth notable.

OSCL is engaged in the manufacturing of organic and inorganic intermediates, ranging from derivatives of molybdenum, selenium and iodine to tartaric acid. Its products find major application in the pharmaceuticals industry, which contributes to around 75 per cent of the total revenues. The chemicals, glass, cosmetics and cattle and poultry feeds industries make up the rest of its revenues.

For the year ended March 2012, on a consolidated basis the company has reported a 57 per cent rise in its bottomline to Rs 16 crore as against Rs 10.18 crore in FY11. The sales have also grown by nearly 57 per cent to Rs 167 crore. While EBIDTA margins have improved by 20 basis points to 19.88 per cent, the PAT margins have remained more-or-less stable at 9.6 per cent.

On the valuation front, its shares are commanding a PE of 8.52x its FY12 EPS of 8.15. The P/BV stands at 1.29x, while its EV/EBIDTA multiple is on the higher side at 5.9x. The return ratios also look comfortable at 15.18 per cent for the ROE and 23.01 per cent for the ROCE. The only concern is the rising debt levels which as on 31st March 2012 stood at 0.9x its total equity.

In conclusion, while the initial numbers of OSCL look quite promising, the final call can on the future of the company can only be taken post our interaction with the management. Accordingly we shall update our readers on the future prospects of OSCL.