Orchid Chemicals & Pharmaceuticals
Cluster: Emerging Star
Price target: Rs460
Current market price: Rs338
On a firm footing
- 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
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.