Wednesday, June 23, 2010
Orchid Chemicals and Pharmaceuticals is a 1300 + Cr pharma company based in
Chennai promoted by Mr.K Raghavendra Rao
Orchid is the largest manufacturer of
Cephalosporin in India and one of the top
five in the world.Company has strong presence
in API and formulation segment.It is very strong
in R&D and has a special R&D wing in the name
of Orchid Research Laboratories with more than
130 scientists.Orchid's plants are approved by
various foreign agencies like US FDA and the
company is one of the largest exporter from India.
Last year was a disaster for orchid mainly
because of its huge debt burden and foreign
currency loss.Inorder to de-leverage ,company last
year sold its generic injectable finished dosage
business to 'HOSPIRA' and repaid loans worth
Rs.1400 Cr using part of this realisation .
Using part of the balance fund ,Orchid recently
aquired a company named Karalex Pharma .
This aquisition will be a boost for its marketing
efforts in US over next few years.company's bad times
are almost over and it is expected to post better
perfomance in the years to come.Orchid is expected
to post a turnover of Rs.1270 Cr and a net
profit of Rs.85 + Crore in current financial year .
Company recently declared a dividend
of Rs.10/- each (100%) too. Moreover after the reduction in debt
Orchid is a perfect takeover target due to its large size ,
quality of operations ,well established R&D and comparatively
low promoter stake At current market price of Rs.161 /- ,
Orchid is a decent BUY.