CMP: Rs.225
Price target: Rs375
Market cap: Rs1,538 cr
52 week high/low: Rs285/165
NSE volume (No of shares) : 3.3 lakh
BSE code: 524372
NSE code: ORCHIDCHEM
Free float (No of shares) : 5.0 cr
RESULT HIGHLIGHTS
OrchidÃs top line grew by 18.1% year on year (yoy) to Rs238.2 crore in Q1FY2008. The top line growth was above our estimates of Rs223.2 crore and was driven by new launches including the launch of Cefepime injections in the USA.
Driven by the improvement in the raw material costs, OrchidÃs operating profit margin (OPM) expanded by 110 basis points to 29.9% in Q1FY2008. On the other hand, the rising R&D costs (due to FTF filings) and increasing staff costs adversely impacted the margins. Consequently, the operating profit grew by 22.8% to Rs71.2 crore in Q1FY2008.
The reported net profit jumped up by 251.7% to Rs51.3 crore, largely due to the foreign exchange (forex) gains recorded during the quarter and the reduction in the interest expense. On adjusting for the forex gains, losses and the associated tax implications, the adjusted net profit rose by 81.8% to Rs26.5 crore.
Orchid has just received approval for Cefdinir tablets and suspension from the US Food and Drug Administration (USFDA). The product, with a market size of $850 million in the USA, will be launched immediately by Orchid. We estimate Orchid to generate approximately $19 million and $25.5 million in revenues in FY2008 and FY2009 respectively.
At the current market price of Rs225, Orchid trades at 9.9x its estimated FY2009 earnings, on a fully diluted basis. We retain our positive outlook on the stock and maintain our Buy call with a price target of Rs375.
Public & others 16%
Nonpromoter 9%
Institutions 16%
Foreign 36%
