Dolat Capital recommended accumulate rating on Vinati Organics with a target price of Rs 2052 in its research report dated July 31, 2019.
Dolat Capital's research report on Vinati Organics
Vinati Organics (VO IN) reported a strong operating performance in Q1FY20. Sales/EBITDA/PAT grew by 9.8/31.0/28.2% YoY to ` 2.90bn/1.20bn/824mn respectively, however sequentially Sales/EBITDA/PAT were largely flat. Sales were lower than our estimate of ` 3.19bn, while EBITDA and PAT were largely in-line (D.est: EBITDA/PAT: ` 1.18bn/785mn). VO reported a strong gross margin expansion of 720 bps YoY and 240 bps QoQ at 57.7%, bulk of the expansion in margins can be attributed to sustained ATBS prices. VO reported the highest ever EBITDA margin of 41.3% up by 670 bps YoY and 95 bps QoQ.
We continue to value VO at 27x FY21 earnings with a revised target price and rating of ` 2,052. We recommend investors to accumulate Vinati Organics.
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