Vinati Organics Ltd.

NSE: VINATIORGA | BSE: 524200 | ISIN: INE410B01037 | Industry: Specialty Chemicals
| Expensive Performer

Vinati Organics Ltd.    
17 May 2022
HDFC Securities
Neogen Chemicals: Our BUY recommendation on Neogen Chemicals (NCL) with a target price of INR 1,900/sh is premised on (1) increasing contribution of the high-margin CSM business to revenue, (2) entry into the new-age electrolyte manufacturing business, (3) capacity-led expansion growth opportunity, (4) constant focus on R&D, and (5) improving return ratios and strong balance sheet, going forward. Q4 EBITDA/APAT were 6/7% above our estimates, owing to a 30% rise in revenue and lower-than-expected tax outgo, but were offset by higher-than-expected raw material cost and other expenses. JMC Projects: JMC Projects (JMC) reported revenue/EBITDA/APAT of INR 15.6/1.3/0.6bn, beat at all levels (13.2/4/26% beat). The EBITDA margin was muted at 8.5%, affected by high commodity prices and supply chain issues. Wainganga Expressway restructuring has got delayed and is now expected by H1FY23, as consent from majority of lenders has been received. Vindhyachal asset refinancing is expected to be completed by H1FY23. The loss funding requirement for these assets, including Agra-Aligarh, is INR 700-800mn. The FY22 order inflow (OI) was at INR 101bn, taking the order book (OB) to INR 171bn. We maintain BUY with a revised target price of INR 142 (11x Mar-24E EPS). We cut our FY23/24 EPS estimate by (10.9)/(17.2)% to factor in elevated commodity prices. Avenue Supermarts: D-MART's unit economics remains subpar. Revenue grew 18% YoY in Q4 (in-line; FY19-22 CAGR: 15%). Our thesis, which penciled in pressure on sales density and its make-up, seems to be playing out, courtesy heightened competitive intensity by horizontal/quick e-commerce. More revealing is the decline in bill cuts...
Vinati Organics Ltd. is trading at high day volume of 132.3K.
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