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Vinati Organics shares ride high for 3rd day on upbeat Oct-Dec operational show

Motilal Oswal Financial Services and Centrum Broking have a Buy call for the stock

February 08, 2023 / 12:03 PM IST

Shares of Vinati Organics extended their winning streak to the third session on February 8 as investors were buoyed by the company's upbeat operational performance in the quarter ended December.

At 11.35 am, shares of Vinati Organics traded 4.40 percent higher at Rs 1,972.55 on the National Stock Exchange.

The company had reported its quarterly earnings for the Oct-Dec period on February 6. Despite Oct-Dec being a seasonally weak quarter, the company managed to reap benefits of an expansion in gross margins due to product pricing benefits, lower power and fuel cost, and operational expenditure.

As a result, the company's EBIDTA margin expanded 710 basis points on year to 32.2 percent in the December quarter. One basis point is one-hundredth of a percent.

Net Sales also rose 37.87 percent to Rs 508.66 crore which aided the 50.7 percent jump in the bottomline which came at Rs. 125.41 crore.

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Brokerage views

Buoyed the positive quarterly performance, most brokerages also remain bullish on the stock.

"A gradual ramp-up in expanded capacity over the next two years will drive growth for the company," brokerage firm Motilal Oswal Financial Services said in its report.

Adding to that, the company's wholly owned subsidiary - Veeral Organics is also set commence production in the first quarter of the next financial year 2023-2024 (Apr-Mar) which should propel Vinati Organics into the next leg of its growth story, the brokerage firm added.

MOFSL has a Buy rating for the stock with a target price of Rs 2,615, reflecting a near 38 percent upside potential from Tuesday's closing price.

Another broking firm, Centrum Broking also remains optimistic on the company’s technology platform and its sustainable higher margins. On that account, the broking firm maintained its Buy rating with a target price of Rs 2,401.

In a stark contrast however, HDFC Securities gave a Sell call for the stock with a target price of Rs 1,690, indicating a near 11 percent downside risk. The sell rating is driven by a shift in the company's revenue mix towards lower-margin products, the brokerage firm said in a report.

HDFC Securities is also of the view that valuations for Vinati Organics remain high at current levels.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.​​​​​​​​​​

Vaibhavi Ranjan
first published: Feb 8, 2023 12:03 pm