Buy Vinati Organics; target of Rs 2600: Motilal Oswal

Motilal Oswal's research report on Vinati Organics

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). Management earlier indicated that 2H of the year generally is better than 1H. The new ATBS line, with a capex of INR3b, is expected to be ready by Mar/Apr’25. Veeral Organics' INR5b capex, spread over two years, has already seen the launch of Monomer Inhibitor and a pharma intermediate. The company is adding three more products: a skincare intermediate, Tertiary Amyl Alcohol, and BHA (for the food industry).

Outlook

We continue to believe that VO’s long-term growth outlook is healthy. We value VO at 45x Dec’26E EPS to arrive at our TP of INR2,600. We reiterate our BUY rating on the stock.