Orchid Chemicals stock surges as Ranbaxy group hikes stake

08 April 2008

Mumbai: Rumours that Orchid Chemicals & Pharmaceuticals Ltd is under takeover threat has fuelled a spurt in its share price. Orchid  shares climbed the most in almost seven years in Mumbai trading after reports that Solrex, owned by the promoters of Ranbaxy Laboratories Ltd, may try to acquire the company.

Solrex Pharmaceuticals Co. increased its stake to 8.06 per cent in Orchid, according to a filing with the National Stock Exchange.

Chennai-based Orchid Chemicals earns most of its revenues (consolidated turnover of Rs 908.5 crore in the first nine months of FY08) from the manufacture and exports of anti-bacterial drug cephalosporins.

It also makes active pharmaceutical ingredients and finished dosage forms for cephalosporins.

The company posted an operating profit of Rs277 crore in FY07.   Orchid's operating profit margin rose 1170 basis points to 28 per cent in FY07 and exports account for about 71 per of sales.

The Rs6,942 crore Ranbaxy has a presence across cardio-vascular, urology and dermatology segments but only a small presence in cephalosporins.