Vinati Organics Ltd. share price target

Vinati Organics Ltd (VOL) registered strong growth in both sales (up 44% y-o-y) and net profitability (up 107% y-o-y) largely due to incremental volumes in ATBS

Vinati Organics Ltd (VOL) enjoys global leadership in two speciality chemicals, with market share of 70% in IBB and 80% in ATBS. Revenue and PAT grew by 43.9% YoY & 107% YoY led by strong traction in ATBS and customised products. EBITDA margins improved by 740bps YoY to 34.7% due to better product mix and benefits of scale. Led by robust demand for IBB & ATBS in FY19E and pick-up in customised products, we expect current growth momentum to continue....

Due to the persistent rally in the stock (up 20%) post results, we downgrade to Neutral from Buy, with no change in P/E multiple and a revised TP of Rs 1,170. Vinati Organics (VO) is off to a spectacular start in FY19, VO has reported Sales/EBITDA/PAT growth of 43.6/82.8/106.6% YoY to Rs 2.64/0.92/0.64bn. PAT, adjusting for forex gain of Rs 90mn in the other income is at Rs 583 mn.

The demand for ATBS is very strong. As crude/oil price increases the demand for ATBS alslo increases, which gives pricing power to the company. For, FY19 demand in 2-Acrylamido 2 Methylpropane Sulfonic Acid (ATBS) would lead to sales...

We value VO at 25x Jun-20 EPS and resume coverage with a TP of Rs 1,185. Vinati Organics (VO IN) is a diversified chemicals manufacturer with an impeccable product selection history, superior return ratios (FY18 RoE/RoIC: 19.5/25.6%), strong environmental practices and a robust earnings trajectory. VO is a leader in its key products like 2-Acrylamido-2-Methylpropane Sulfonic Acid (ATBS-45% global share), Iso Butyl Benzene (IBB-65% global share) & Iso Butylene(IB-70% domestic share) with technology tie-ups with leading national institutes.

Vinati Organics Ltd (VOL) reported net sales of INR 213 crs during the quarter which was ~11% above our estimate of INR 192...

Vinati Organics Ltd. (VOL) is a global leader in Isobutyl Benzene (IBB) and 2-Acrylamido-2-Methylpropane Sulfonic Acid (ATBS).

Sector: Specialty Chemicals/Mid Cap | Earnings Update 3QFY18 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 and second largest manufacturer of ATBS. 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 45% of the market share. The company also command more than...