Vinati Organics Ltd Q1 FY23 Result Updates. Increase in revenue driven by ATBS sales.

Vinati Organics Ltd Q1 FY23 Result Updates.
Increase in revenue driven by ATBS sales.

Net profit has seen a jump of 24.97% YoY to Rs. 1,011 Mn. The PAT margins contracted by 97 bps YoY and 83 bps QoQ to 19.97% in Q1FY23.
In Q1FY23, Vinati Organics’s consolidated revenue grew by 31.03% YoY and by 4.16% QoQ to Rs. 5,063 Mn. Overall demand growth was led by ATBS segment.
Earnings before interest, tax, depreiation and amortization (EBITDA) has seen a growth of 28.79% YoY basis and de growth of 5.67% QoQ to Rs. 1,309 Mn, while EBITDA margins remained flat down 45bps YoY and declined by 269 bps QoQ to 25.85% in Q1FY23.
The demand from end user industry pushed ATBS sales. The company delivered sharp uptrend in its consolidated revenues 31.03% YoY and 4.16% QoQ to Rs. 5,063 Mn. Such performance was led by higher volumes coming in due to increasing demand for high purity grades of ATBS. The growth was also supported by Butyl phenol business. The antioxidant plant is currently operating at 25% capacity and is expected to touch 50% capacity in next year.

Increased realisations were the result of input cost transfer.

On operational front the company delivered EBITDA growth of 28.79% YoY basis and 5.67% QoQ to Rs. 1,309 Mn. EBITDA margins remained flat down 45bps YoY and declined by 269 bps QoQ to 25.85% in Q1FY23. The company has been able to maintain the margins per kg due to softening of Acrylonitrile prices and its ability to pass on the input cost to its customers. Also freight cost has begun to come off lately from peak levels. PAT saw a jump of 24.97% YoY to Rs. 1,011 Mn. The PAT margins contracted by 97 bps YoY and 83 bps QoQ to 19.97% in Q1FY23. Vinati organics is able to get bookings for shipments but overall time taken for it is still high.
Continuous investment led to growth. VOL intends to expand its Acrylamide tertiary-butyl sulfonic acid (ATBS) capacity from present 40,000MT to 60,000MT. The announced capex is going to be a brownfield expansion to the tune of Rs. 3,000 Mn which will be funded through internal accruals and is expected to get commissioned by December 2023. Also with that it plans to expand its product portfolio through Veeral Organics Pvt Ltd (its fully owned subsidiary) by introducing products like MEHQ & Guaiacol (2,000 MT) and Iso Amylene (30,000 MT). It will be a sole manufacturer of Iso Amylene in India and is initially looking to cater the export demand. These products are employed in pesticides, medicines, flavours, and polymerization inhibitors. While this will be a greenfield expansion the total capex is approximately Rs. 2,800 Mn.

The shares of Vinati Organics Ltd are trading at Rs. 2227.45, down by 0.72%.

Valuations:
The return on equity (ROE) is 20.6% for the quarter ended June 2022. The price-to-earning (P/E) ratio stood at 62.6. The return on capital employed (ROCE) for the company is 26.6%. The price to book value of Vinati Organics Ltd is 12.5. The EV/EBITDA is 43.7. EPS in Q1FY23 came at INR 9.85 against Rs. 9.84 in the same period last year.