Vinati Organics Ltd. share price forecast

Robust end market demand, Outlook positive

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 (VOL) enjoys global leadership in two specialty chemicals, with market share of 70% in IBB (isobutyl benzene) and 80% in ATBS (2-Acrylamindo 2-Methylpropane Sulfonic Acid)....

Background: Vinati Organics Limited (VOL) was established in 1989 to manufacture specialty organic chemicals. It has since grown to become the w orld's largest manufacturer of IBB & ATBS and India's largest manufacturer of IB & HP MTBE. The company's products are exported to customers in countries across Europe, America, and Asia. Competitive edge in niche specialty chemicals Cost leadership & scale economies in IBB and technological entry barrier in ATBS. The company started with a small capacity of 1,000 TPA and gradually expanded to 26,000 TPA today for its ATBS production, capturing 60% of the market share. The company also commands more than 65% market share in the world for IBB. With consistent investments in technology and...

The company has two manufacturing facilities at Mahad and Lote In terms of revenue contribution, ATBS constitutes ~40-50% of overall revenue followed by IBB of 20-30% while the rest is from other segments such as IB, Butyl phenols and derivatives Q3FY22 Results: Numbers were below our estimates across all parameters,...

KEC International: KEC reported robust execution with revenue at INR 33.4bn, driven by non-T&D segments. EBITDA margin, at 7.2%, was affected mainly by raw material prices and losses in SAE. With the highest ever 9MFYTD order Inflow (OI) of INR 141bn, the order book (OB) stands at INR 285bn (with L1 of INR 41bn). Loss funding in SAE for 9MFYTD is at INR 2bn. On the other hand, collections from Afghanistan are still stalled, with net exposure of INR 2bn. The increasing share of civil projects with better collection period, receding losses in SAE, and likely improvement in railways collections from Q4, the NWC days are expected to be at 120 days. A well-diversified OB, and likely improvement in margins due to increasing share of non-T&D in the mix may lead to rerating. We maintain BUY on KEC with a revised target price of INR 578/sh (15x Mar-24E EPS). We have cut estimates to factor in longer-than-expected recovery in SAE margins. Tech Mahindra: With better-than-expected revenue growth of +4.7% QoQ CC (organic ~4%) and healthy net new deal wins (TTM +97% YoY), we maintain BUY on Tech Mahindra (TechM). The growth was led by CME (5G deals) while enterprise was soft due to the furlough impact. The net-new TCV, at USD 704mn, was strong across the telecom and enterprise segment, driven by mid-sized deals. 5G remains a big opportunity and deal wins are in areas of network, cloud, data and IoT. The key attributes that underscore our positive stance are (1) healthy deal wins in the...

Background: Vinati Organics Limited (VOL) was established in 1989 to manufacture specialty organic chemicals. It has since grown to become the world's largest manufacturer of IBB & ATBS and India's largest manufacturer of IB & HP MTBE. The company's products are exported to customers in countries across Europe, America, and Asia. Competitive edge in niche specialty chemicals Cost leadership & scale economies in IBB and technological entry barrier in ATBS. The company started with a small capacity of 1,000 TPA and gradually expanded to 26,000 TPA today for its ATBS production, capturing 60% of the market share. The company also commands more than 65% market share in the world for IBB. With consistent investments in technology and...

Nuvoco Vistas: We maintain our BUY rating on Nuvoco Vistas (Nuvoco) with an unchanged target price of INR 827/share (11x its consolidated Sep-23E EBITDA). We continue to like it for its leadership presence in the east, its various margin initiatives, and continued deleveraging of its balance sheet. Weak demand in the east and high opex hit its profitability in Q2. The impact, however, was moderated by rising contribution of synergy benefits and ongoing cost reductions. While consolidated revenue grew 13% YoY to INR 20.20bn, EBITDA fell 9% YoY to INR 3.31bn. Higher capital charges led to a net loss of INR 0.26bn (vs a net loss of INR 0.16bn YoY). Nuvoco reduced its net debt/EBITDA to 3.1x in Sep-21 (vs 4.7x in Mar-21) and aims to lower it further to 2.2x by Mar-22E. Sundram Fasteners: Sundram Fasteners (SF) reported healthy Q2FY22 standalone revenue growth of INR10.6bn (+39% YoY, +13% QoQ) despite the ongoing chip shortage. The revenue outlook is encouraging, with SF on course to surpass its pre-COVID turnover this year itself (FY19 revenue was INR40bn). The company is gaining market share from smaller parts suppliers, against the backdrop of COVID. Further, the share of exports is expected to reach 50% of revenues in the medium term (up from 35% presently), when the new plant ramps up and SF increases its order size wins. While our estimates are largely unchanged over FY22-24E, we are rolling forward our TP timeframe to Sep-23E and setting a revised target price of INR 900, based on 28x forward EPS. We...

Vinati Organics Ltd (VOL) enjoys global leadership in two specialty chemicals, with market share of 70% in IBB (isobutyl benzene) and 80% in ATBS (2-Acrylamindo 2-Methylpropane Sulfonic Acid). Q2FY22 revenue grew by 71% YoY led by higher contribution...

In terms of revenue contribution, ATBS constitutes ~40-50% of overall revenue followed by IBB of 20-30% while the rest is from other segments such as IB, Butyl phenols and derivatives than-expected owing to lower-than-expected gross margins....

Driven by an uptick in end-user industries and a strong traction from ATBS segment on account of pent-up up demand, VOL's Q1FY22 revenue from operations leapt by an enthusing 38.1% to Rs. 386.37 cr from Rs....

Background: Vinati Organics Limited (VOL) was established in 1989 to manufacture specialty organic chemicals. It has since grown to become the world's largest manufacturer of IBB & ATBS and India's largest manufacturer of IB & HP MTBE. The company's products are exported to customers in countries across Europe, America, and Asia. Competitive edge in niche specialty chemicals Cost leadership & scale economies in IBB and technological entry barrier in ATBS. The company started with a small capacity of 1,000 TPA and gradually expanded to 26,000 TPA today for its ATBS production, capturing 60% of the market share. The company also commands more than 65% market share in the world for IBB. With consistent investments in technology and...