1. At a Glance
Oriental Aromatics is a 50-year-old fragrance, camphor, and aroma chemicals maker that trades at a premium P/E of ~46 despite limp sales growth (4% CAGR over 5 years) and low ROE (~5%). FY25 revenue ₹935–₹938 Cr, PAT ₹24 Cr, margins ~9% OPM, and dividend yield 0.15%. Stock is down ~35% in a year — proving that even the sweetest-smelling business can stink up your portfolio if growth goes missing.
2. Introduction
Founded in 1973, Oriental Aromatics (OAL) produces aroma chemicals, camphor, and fragrance blends for industries ranging from FMCG to pharmaceuticals. The business has enviable product diversification — it can supply camphor for your puja room, fragrance for your perfume, and aroma chemicals for your toothpaste.
Problem? Volatile raw material costs, slow revenue growth, rising borrowings (₹353 Cr FY25 vs ₹206 Cr FY24), and shrinking investor patience.
3. Business Model (WTF Do They Even Do?)
Revenue streams:
- Aroma Chemicals — Synthetic compounds for perfumes, soaps, cosmetics.
- Camphor & Allied Products — Industrial and pharma grades.
- Fragrances & Flavours — Blends for FMCG, food, and personal care.
Customer base: FMCG companies,
pharma firms, industrial buyers.
Business nature: High product diversity but raw material prices (often petrochemical-derived) directly hit margins.
4. Financials Overview
FY25:
- Revenue: ₹938 Cr (+11% YoY)
- EBITDA: ₹88 Cr (9.4% margin)
- PAT: ₹24 Cr (+171% YoY from depressed FY24 base)
- EPS: ₹7.08
- ROE: 5.31%
- ROCE: 7.89%
- Debt: ₹353 Cr (vs ₹206 Cr FY24)
Annualised P/E Check:
EPS ₹7.08 @ ₹331 → P/E ≈ 46.75×.
For context, Pidilite’s at 71× but with 23% OPM; here, OPM is single-digit.
5. Valuation (Fair Value RANGE only)
Method 1: P/E Multiple
Fair P/E for small-cap speciality chem with low ROE: 15–20×.
FV Range = ₹106 – ₹142.
Method 2: EV/EBITDA
EV = ₹1,105 Cr (MCap) + ₹353 Cr (Debt) – ₹0 Cr (cash assumed negligible) ≈
