Sharekhan's research report on Vinati Organics
Q1FY23 revenue/operating profit of Rs. 506 crore/Rs. 131 crore; up 31%/29% y-o-y reflects strong pricing environment for ATBS/IBB and ramp-up of butyl phenol capacities. PAT at Rs. 101 crore, rose 25% y-o-y and was 3% above estimate on higher revenues and other income, but this was partially offset by lower margins. OPM of 25.8% (down 270 bps q-o-q) was 32 bps below our estimate due to elevated energy cost and weaker revenue mix due to ramp-up of low-margin butyl phenol and a recovery in IBB segment. Overall, ATBS demand/margin remains robust and the plant is operating at 100% utilisation. Management has guided for 25% revenue growth and EBITDA margin of 28-30% in FY23 and has been guiding to almost double revenues to Rs. 3,000 crore by FY25 led by a ramp-up of new products (Butyl Phenol, anti-oxidants and five specialty intermediates). The company plans to expand ATBS/butyl phenol capacity by 50%/42% to 60 kt/50 kt at a capex of Rs. 300 crore/Rs. 100 crore.
Outlook
We maintain a Buy on Vinati Organics with a revised PT of Rs. 2,500 given our expectations of strong 39% PAT CAGR over FY22-24E, dominant market share in ATBS/IBB, entry into newer products and improvement in RoE/RoCE to 27%/34 .
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