Target: ₹2,600
CMP: ₹2,116.45
Vinati’s H1-FY23 performance was good, beating our estimates. Its revenue grew a strong 41 per cent y-o-y to ₹1,070 crore led by high volume growth in ATBS and IBB. EBITDA was up 38 per cent y-o-y to ₹280 crore with a 26 per cent margin. We are positive on Vinati’s long-term performance as it is in a good position in the industry. We expect its robust growth momentum to continue on strong ATBS demand, greater butyl phenol utilisation, the Veeral amalgamation (anti-oxidants) and foray into manufacturing MEHQ, guaiacol and iso-amylene (IB derivatives).
The management talked of demand continuing in key categories (ATBS, IBB and IB), and does not expect a demand slowdown due to the present Europe situation. The butyl phenol plant (commissioned last year), now operating at about 65 per cent, is aimed to be operated at 85 per cent in FY24. The ATBS expansion (50 per cent capacity addition) will support volume growth in the coming years. Further, the anti-oxidant plant is expected to contribute materially from FY24.
We are positive on the company’s long-term performance and expect revenue/EBITDA/PAT to clock 27 per cent/31 per cent/30 per cent CAGRs over FY22-25.
Risks: Delay in expansion and securing customer approvals for new products, slowdown in R&D and new product pipeline.