Buy Vinati Organics, target price Rs 2170: Motilal Oswal

Motilal Oswal has buy call on Vinati Organics with a target price of Rs 2170. The current market price of Vinati Organics Ltd. is Rs 1858.7. Time period given by analyst is one year when Vinati Organics Ltd. price can reach defined target.

Vinati Organics Ltd., incorporated in the year 1989, is a Mid Cap company (having a market cap of Rs 19152.41 Crore) operating in Chemicals sector.

Financials
For the quarter ended 31-03-2021, the company reported a Standalone Total Income of Rs 286.34 Crore, up 23.02 % from last quarter Total Income of Rs 232.76 Crore and up 9.47 % from last year same quarter Total Income of Rs 261.56 Crore. Company reported net profit after tax of Rs 70.86 Crore in latest quarter.

Investment Rationale
The stock is trading at 36x FY23E EPS of INR50.5 and 26x FY23E EV/EBITDA, with attractive return ratios of ~25% (+600bps v/s FY21). It has a fixed asset turnover of 1.3x, which is likely to double over next three years. The brokerage expects 33% PAT CAGR during FY21-24E, and value the company at 43x FY23E EPS to arrive at TP of INR2,170.

Promoter/FII Holdings
Promoters held 74.1 per cent stake in the company as of March 31, 2021, while FIIs held 3.5 per cent, DIIs 7.3 per cent and public and others 15.2 per cent.