Accumulate Vinati Organics; target of Rs 2237: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Vinati Organics with a target price of Rs 2237 in its research report dated August 12, 2024.

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August 19, 2024 / 13:04 IST

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Vinati Organics

Vinita Organics (VO IN) reported a topline of Rs5.2bn, reflecting 19.6% YoY growth, although it declined by 4.7% QoQ. Gross margin decreased by 170bps sequentially; however, margins are expected to improve as the company plans to pass on the increased raw material costs to customers. ATBS, the company's key product, which contributes approximately 33-35% of total revenue, is projected to see a 20% volume increase in FY25. Additionally, Vinita Organics commenced commercial production of MEHQ and Guaiacol in Mar’24; these products are expected to start contributing to revenue in the second half of FY25. The company’s antioxidant segment, which is focused on capturing the domestic market, is expected to double its revenue in FY25. Several key projects, including the ATBS expansion, phenol plant, and launch of additional antioxidants, are on track and anticipated to come online in H2FY25. We expect the company's performance to improve as the ATBS expansion aligns with the growing demand, particularly as oil and gas companies increasingly focus on enhanced oil recovery,rather than new field drilling, along with additional applications in water treatment.

Outlook

Furthermore, the contribution from newly launched products is expected to rise. The stock currently trades at approximately 48x FY26 P/E with return ratios exceeding 15%. We maintain an ‘Accumulate’ rating on the stock, with a revised target price of Rs2,237, valuing it at 51x P/E on FY26E EPS of approximately Rs44.

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