Hold Vinati Organics; target of Rs 2002: KR Choksey

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26 Aug, 2025 12:21

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Vinati Organics Ltd (VO) reported revenue of INR 5,247 Mn, up 19.6% YoY (-4.7% QoQ), largely in line with our estimate (-2.6% miss on estimated revenue). EBITDA grew to INR 1,247 Mn, up 24.2% YoY (-16.8% QoQ), missing our estimates on the back of higher raw material costs and power & fuel costs leading to an EBITDA margin of 23.8% (+88bps YoY / -348bps QoQ). VO reported PAT of INR 842 Mn, up 21.3% YoY (-19.2% QoQ), missing our expectations due to weak operating performance and higher depreciation with PAT margin at 16.0%, up 22bps YoY (-289bps QoQ). We lower our FY26E EPS to INR 50.0 (previously: INR 51.3), on the back of weaker than anticipated Q1FY25E. However, we increase our PE multiple to 40.0x (previously: 35.0x), reflecting our positive outlook on demand recovery as destocking stabilizes and planned capex is expected to begin generating results in H2FY25E and FY26E. Accordingly, we raise our target price to INR 2,002 (earlier: INR 1,795). We retain our Hold rating on the shares of Vinati Organics Ltd, given the marginal upside potential.

Based on these developments, we raise our PE multiple to 40.0x (previously: 35.0x). However, we reduce FY26E EPS to INR 50.0 (previously: INR 51.3), adjusting for weaker Q1FY25 results against our estimates. Accordingly, we raise our target price to INR 2,002 (previously: INR 1,795), showcasing the potential for enhanced growth stemming from expanded capacity, increased capacity utilization, the fresh product portfolio in AO, synergy benefits from VOPL, and better macroeconomic conditions. We retain our Hold rating, given the marginal upside potential.

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