- 24 Jun 2022
- ICICIdirect Research
VINATI ORGANICS TO EXPAND ATBS CAPACITY
VINATIORGA - 1720 Change: -9.75 (-0.56 %)News: Given the strong demand outlook of ATBS, Vinati Organics will be expanding ATBS capacity from 40000 MT to 60000 MT. This would entail a capex of Rs. 300 crore, which will be funded by internal accruals and is expected to get commissioned by December 2023. The capital expenditure in Veeral Organics Pvt Ltd (fully owned subsidiary of Vinati Organics) is in progress. The total capex is ~Rs. 280 crore and the products include 2000 MT of MEHQ & Guaiacol and 30000 MT of Iso Amylene. These products are used in polymerisation inhibitors, flavours, fragrances, pharmaceuticals and pesticides. The commissioning is expected by September 2023
Views: ATBS currently forms around 50% of overall revenue with OPM in the range of 40-50%. We expect with the current performance likely to sustain ahead, payback period for the upcoming investment would be less than two years. Moreover, MEHQ and Guaiacol are currently produced by clean science in the domestic market. Since Vinati will have backward integration for these products, we expect it to garner meaningful market share in the long run
Impact: Positive