Geojit recommended hold rating on Vinati Organics with a target price of Rs 1384 in its research report dated August 13, 2018.
Geojit's research report on Vinati Organics
Vinati Organics Ltd (VOL) enjoys global leadership in two speciality chemicals, with market share of 70% in IBB and 80% in ATBS. Revenue and PAT grew by 43.9% YoY & 107% YoY led by strong traction in ATBS and customised products. EBITDA margins improved by 740bps YoY to 34.7% due to better product mix and benefits of scale. Led by robust demand for IBB & ATBS in FY19E and pick-up in customised products, we expect current growth momentum to continue. Earnings outlook has significantly improved led by capacity expansion in ATBS and launch of new products in next 1-2 years. We upgrade our earnings estimates by 13% & 21% for FY19 & FY20E. Consequently, earnings to grow at 33% CAGR over FY18-FY20E.
Given strong earnings outlook and RoE of 26% (last 5yrs), we value VOL at 28x (27x earlier) on FY20E. However, we downgrade to “Hold” from Buy with a target price of Rs1,384 given sharp up-move in stock prices.
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