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Recommendations

Monday, May 08, 2006

Sharekhan Investor's Eye


Orchid Chemicals & Pharmaceuticals
Cluster: Emerging Star
Recommendation: Buy 
Price target: Rs460
Current market price: Rs338

On a firm footing

Result highlights

  • The net sales of Orchid Chemicals for Q4FY2006 increased by 34.7% to Rs239.8 crore year on year (yoy) due to the stable sales from the key US market. 
  • The operating profit increased by 67.2% yoy as the operating margin improved by 560 basis points to 28.8%.
  • The key reason for the pull down of the net profit was a huge jump in the depreciation cost that included Rs9 crore of amortisation expenses that will be reimbursed to the company by its partners. The company, however, still showed a 223% growth in its profit before tax.
  • Further the company provided a deferred tax of Rs4.1 crore in the quarter as against a deferred tax write-back of Rs9.8 crore in Q4FY2005.
  • As a result of these one-time expenses, the company reported a profit after tax (PAT) of Rs19.4 crore in Q4FY2006, an increase of 17% yoy.
  • On an adjusted basis, once we take the deferred tax write-back as a one–time expense in Q4FY2005 and remove the one-time excess depreciation, we get a completely different picture. The adjusted PAT stood at Rs28.4 crore, up 318% yoy.

Numeric Power Systems 
Cluster: Ugly Duckling
Price target: Book profit
Current market price: Rs414

Book profit

We had recommended Numeric Power Systems Ltd (NPSL) as a Stock Idea on June 16, 2005 at Rs260 with a price target of Rs400. Since then the stock has appreciated by 56% and has well surpassed our price target. We recommend investors to book profit on the same.


India Cements - Morgan Stanley


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Courtesy : Ashis

Cadilla - AskRJ


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