Vinati Organics Ltd. share price target

Volume growth seen; healthy growth to continue

Vinati Organics (VO)’s 3QFY25 revenue came in a tad above our estimate at INR5.2b. Gross margin expanded 180bp YoY to 49%, while EBITDAM was up 180bp YoY at 27.4%. EBITDA increased 24% YoY to INR1.4b and PAT grew 24% to INR956m (our est. INR1b).

VO revenue came in line with our estimates while PAT surpassed our expectations by 4.9%.
Revenue stood at INR 5,533 Mn, up 19.5% YoY (+5.5% QoQ).

Vinati Organics (VO) has strengthened its operations through backward integration, which is expected to expand its margins.

Vinati Organics Ltd (VO) reported revenue of INR 5,247 Mn, up 19.6% YoY (-4.7% QoQ), largely in line with our estimate (-2.6% miss on estimated revenue).
EBITDA grew to INR 1,247 Mn, up 24.2% YoY (-16.8% QoQ), missing our estimates on the back of higher raw material costs and power & fuel costs leading to an EBITDA margin of 23.8% (+88bps YoY / -348bps QoQ).

Q1 PAT of Rs. 86 crore, which is an 18% decline q-o-q, fell 22% short of our estimate due to weaker-than-expected revenue and higher raw material costs.

Vinati Organics (VO)’s 1QFY25 revenue came in below our estimate at INR5.2b. Gross margin declined 270bp YoY to 44.9%, while EBITDAM was up 100bp YoY at 23.8%.

VO announced revenue of INR 5,503 Mn (+22.8% QoQ/+6.0% YoY) surpassing our estimates driven by the normalization of ATBS sales, as destocking is now concluded.
EBITDA grew to INR 1,499 Mn (+30.8% QoQ/+1.8% YoY) beating our estimates on back of strong top-line growth, lower power and fuel expense, and lower other expenses with EBITDA margins at 27.2% (+165 bps/ -111 bps).

Sequential recovery in Q4; a healthy growth to sustain

Vinati Organics (VO)’s revenue came above our estimate due to a robust
recovery in volumes across products in 4QFY24. However, gross margin
contracted 310bp YoY to 46.6%, while EBITDAM was down 110bp YoY to 27.3%.
EBITDA rose 2% YoY to INR1.5b, while PAT was flat at INR1b (our est. INR630m).

The Company's Q3FY24 performance was marked by a 13.3% YoY and 3.2% QoQ decline in revenue, primarily due to destocking in ATBS (65% market share, capacity of 40,000 tonnes) and broader pricing pressures across its portfolio. ATBS, contributing roughly 30% of revenue, witnessed price corrections to USD 3.2 amidst rising raw material costs (RMC) and freight expenses.

Q2FY24 revenues continue to see a decline of 20.9% YoY on account of lower sales in the ATBS segment. ATBS continues to be impacted due to the destocking of inventories at the customer end. ATBS saw the highest amount of destocking in H1FY24; however, the inventories at the customer end are expected to be zero by the end of December 23.

Weak performance owing to subdued demand for ATBS