Geojit's research report on Vinati organics
Vinati Organics Ltd (VOL) enjoys global leadership in two specialty chemicals, with a market share of 70% in IBB (isobutyl benzene) and 80% in ATBS (2-Acrylamindo 2-Methylpropane Sulfonic Acid). Revenue grew by 38% YoY in Q3FY23, exceeding our expectations, driven by its key products ATBs and healthy growth across other segments. 9MFY23 PAT was up by 40% YoY. EBITDA grew by 77% YoY, while margins expanded by 700bps YoY to 32.2% led by superior revenue growth & better product mix. Consequently, PAT grew by 51% YoY. Revenue growth momentum is expected to continue, given strong demand for its key products, capacity expansion and higher contribution from new products. Synergies owing to backward & forward integration, strong cash flows, healthy balance sheet and ROCE & ROE of above 24% (5yr avg.), instills confidence.
We value VOL at a P/E of 30x as we roll forward to FY25E. Given strong earnings outlook, we maintain a BUY rating on VOL, with a target price of Rs. 2,148.
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