Reviews
In this edition, we have reviewed Meghmani Organics and Oricon Enterprises. We suggest our reader-investors to HOLD in Meghmani Organics and Oricon Enterprises.
We had recommended Meghmani Organics in vol 33, issue no. 14 dated June 11-24, 2018, under the ‘Low Priced Scrip’ section when the stock was trading at Rs90.85. Meghmani Organics was founded in 1986 as a partnership firm by the name of Gujarat Industries to manufacture pigments. The company’s high productivity and profitability transformed Gujarat Industries into a joint stock company under the name of Meghmani Organics Limited in 1995. Since then, the company has diversified its business interests to include a range of pesticides and other pigment products as well.
Meghmani Organics is an India-based manufacturer of pigment and pesticide products. The company’s segments include pigments, agro chemicals, basic chemicals and others. The company produces pesticides for crop and non-crop applications such as for insect control in wood preservation, foodgrain storage and public health .The company’s brand names include Megastar, Megacyper, Megaban, Synergy and Courage. The company’s basic chemical portfolio includes caustic soda, hydrogen and chlorine.
On the financial front, the company posted sales of Rs552.3 crore as against Rs450.4 crore in the corresponding quarter last year, registering an increase of 22.6 per cent YoY. The EBITDA for the company came in at Rs145 crore, up 23.7 per cent YoY. The PAT for the quarter came in at Rs79.4 crore as against Rs62.6 crore in the corresponding quarter last year, registering a growth of 26.8 per cent YoY. On the annual front, the company’s net sales on a standalone basis came in at Rs1238 crore ,registering a growth of 18.35 per cent in FY18 as against 1046.19 crore in FY17. The PBT for the company stood at Rs121.55 crore in FY18 as against 65.47 crore in FY17. The company’s PAT jumped 85 per cent to Rs76.93 crore in FY18 from Rs41.51 crore in FY17. Since our recommendation, the stock has fallen 44.57 per cent. However, we suggest our investor-readers to HOLD the stock as we expect the company to deliver better performances in the future.
We had recommended Oricon Enterprises Ltd in Vol 33, issue 26 under the “Low Priced Scrip” when the stock was trading at Rs32.25. It was recommended owing to the robust revenue growth, chemical stocks being in favor and the company’s capex plans.
Oricon Enterprises is engaged in the business of manufacturing of pentanes, liquid colorants and pet bottles. The Company’s segments include Logistics, Automobiles, Packaging, Real Estate, Petrochemical, Trading, Liquid Colorants and Others.
The net sales have gone up 69 per cent in Q3FY19 and came in at Rs145.44 crore as against Rs85.97 crore in Q3FY18. The PBIDT has climbed 214 per cent in Q3FY19 to reach Rs11.86 crore as compared to Rs3.77 crore in the same quarter of the previous year. The PAT was reported at Rs6.89 crore as against a loss of Rs2.97 crore in Q3FY18.
On the annual front, the company’s net sales have gone up 35 per cent in FY18 versus Rs38.88 crore in FY17. The PBIDT has climbed 92 per cent in FY18 to Rs20.76 crore as compared to Rs10.84 crore in FY17. The company has witnessed a PAT growth of 91 per cent to Rs15.45 crore in FY18 versus Rs8.07 crore in FY17. The stock since our recommendation has fallen by 22.30 per cent. The company has reflected strong financials as stated above. Also, the stock is trading 0.59 times its book value and we expect the company to deliver a good quarter in the future. We therefore recommend our investor-readers to HOLD the stock.