Buy Vinati Organics; target of Rs 2500: Motilal Oswal

Motilal Oswal's research report on Vinati Organics

Vinati Organics (VO) has strengthened its operations through backward integration, which is expected to expand its margins. Additionally, its vertical integration, along with the Veeral Additives (VAPL) merger, is likely to enhance economies of scale and help VO maintain/expand its market share in ATBS and antioxidants (AOs). Further, the commissioning of OSBP and DSBP plants positions VO as the sole domestic producer, reducing India's import reliance. With a 65% global market share in ATBS and IBB, VO aims to expand its ATBS capacity by 2HFY25. The company is also diversifying its portfolio through niche products and specialized polymers from Veeral Organics (VOPL) while advancing its sustainability strategy. In FY24, the company added 11.5MW of solar power and is targeting an additional 6.5MW in FY25, further reducing its carbon footprint.

Outlook

We continue to believe that VO’s overall long-term growth outlook is healthy. The stock is trading at ~39x FY26E EPS of INR54 and ~28x FY26E EV/EBITDA. It had a fixed asset turnover of 1.5x as of FY24. We value the company at 45x Sep’26E EPS to arrive at a TP of INR2,500. We reiterate our BUY rating on the stock.