Hold Vinati Organics; target of Rs 1900: Sharekhan

Sharekhan recommended Hold rating on Vinati Organics with a target price of Rs 1900 in its research report dated August 16, 2023.

Broker Research

August 18, 2023 / 14:15 IST

Hold

26 Aug, 2025 12:21

Volume

Todays L/H

Sharekhan's research report on Vinati Organics

Q1 results were weak and reflected volume pressure primarily due to destocking of ATBS inventory and a fall in margin amid a favourable revenue mix and impact on operating leverage. Thus, consolidated PAT of Rs. 83 crore (down 28% q-o-q) was 10% below our estimates. H2FY23 saw high ATBS offtake given supply chain concern which led to overstocking of ATBS with the customers. The company expects normalisation in H2FY24 and ATBS capacity expansion by 20000 TPA would get delayed to Q4FY24 or early next fiscal as compared to earlier commissioning target of Q3FY24. We cut our FY24/FY25 earnings estimate by 18%/15%. Management’s FY24 revenue/margin guidance of Rs. 2,000 crore/28% implies steep earnings de-growth in current fiscal. FY25 revenue growth guidance of 20-25% led by pick-up in antioxidants and recovery in ATBS. Investment of Rs. 280 crore on niche like MEHQ & Guaiacol and Iso Amylene would also get delayed by 6 months to March 2024. Also, VAPL merger is still pending with NCLT.

Outlook

We maintain a Hold rating on Vinati Organics Ltd with a revised PT of Rs. 1,900 given muted earnings outlook amid a challenging environment and rich valuation of 46x/33x its FY2023E/FY2024E EPS limits any meaningful upside from CMP.

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