Omkar Speciality Chemicals is involved in the production of speciality chemicals and pharma intermediates. Omkar manufactures a range of organic, inorganic and organo inorganic intermediates. The inorganic intermediates include Molybdenum derivatives, Selenium derivatives, Iodine derivatives, Cobalt derivatives, Bismuth & Tungsten derivatives and the organic intermediates include Tartaric acid derivatives and other intermediates. These products find applications in various industries like pharmaceutical industry, chemical industry, glass industry, cosmetics, ceramic pigments and cattle and poultry foods. Iodine and Selenium derivatives are our key category of products contributing 88.23% to our gross sales during the year 2009-10.Omkar exports its products to Europe, North America, Asia, South America and Australia. Exports form between 8and 12% of the total sales. The company has four manufacturing units located at Badlapur in Maharashtra and is roughly 75 kms from Mumbai. The total manufacturing capacity of the company has in the current quarter increased from 750 tons per annum to 950 tons. Post IPO and expansion the total capacity over the next 18-20 months would increase fourfold to 3650 tons. Taking into account the expansion time of 18-20 months and the stabilisation period of the expanded capacity thereafter, it would be fair to presume that in about 36 months the company would have a substantial capacity expansion in place. It would be fair to presume that once the expansion is in place, the capacity utilisation of 80% in 2014 could yield a turnover of Rs 450 crs or more. The company has chosen to compare itself with Camlin Fine Chemicals Ltd, Transpek Industry Ltd, Alkali Metals Ltd and Suven Lifesciences Ltd. These companies are strictly not comparable and they have been given only as without comparison valuations are not complete. Looking at the scope, capacity expansion and the domination of pharmaceutical in the business mix helps the company in margins and growth strategy. The company is in a growth stage and has been clocking a compounded annual growth rate of over 35% in the last four/five years. It is now taking a quantum jump and increasing its capacity four fold. Once the same is in production it would be prudent to expect this company being a 450-500 crs company in 2014-15 with margins of 11-12% at the net level. I believe there is money to be made in the immediate short term in the company and the long term.The prospects for the company are bright......BUY ...A Sureshot Multibagger .
