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Orchid Chemicals and Pharmaceuticals' stock has been on the downswing ever since it reported a sharp fall in net profit for March quarter.
The stock has fallen 14 per cent since May 15 when it announced the results. On the BSE today Orchid's shares closed at Rs 119.90, just six per cent above its 52-week low of Rs 112.25 on December 19, 2011. In April its stocks ranged around Rs 170-190.
Orchid Chemicals' net profit dropped 65 per cent to Rs 21 crore for the quarter ended March 2012. Revenue declined 8 per cent to Rs 452 crore (Rs 495 crore).
‘Not bad'
According to a company official who did not want to be quoted, the stocks have stabilised after the fall on the back of weak results. On whether the Rupee depreciation could have had an impact on share price, the spokesperson said its imports are miniscule.
Ms Sarabjit Kour Nangra, an analyst with Angel Broking said the numbers were not bad given the circumstances the company was in — one of its plants facing closure due to environmental issues and Hospira seeing slower than expected numbers last quarter — , she said. Being a mid-cap company, it will take the Orchid share price longer to recover. “We don't expect a sharp recovery immediately,” said Ms Nangra.
Angel Broking maintains its Buy view on the stock. “For the next two years, we do not see any reason for the valuation to fall.”
Market analysts also said low and pledged promoters' holding is also the other major concern for the stock.
At the end of March 2012, promoters' holding in the company stood at 32.42 per cent stake, with nearly three-fourth pledged with financiers.
Serum Institute of India has 4.98 per cent stake in the company. Major institutions which have exposure in the company include Citibank, LIC, Barclays Capital and Macquarie Bank. Ace investor Rakesh Jhunjhunwala along with his family members also hold about 3.4 per cent stake in the company.
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