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  • 01 Feb 2022
  • ICICIdirect Research

VINATI REPORTS LOWER OPERATIONAL GROWTH, IMPACTED BY HIGHER OTHER COST

VINATIORGA - 1932 Change: -7.95 (-0.41 %)

News: Vinati Organics reported topline growth of 65% YoY to Rs.369 crore against our estimates off Rs.397.5 crore. We expect the growth should have been driven largely on account of better sales from ATBS segment, We expect the miss on topline should be on account of lower than expected IBB sales. Rise in the input cost and delay in passing on entire inflation along with changes in the product mix towards butyl phenols have impacted gross margins for the quarter, which declined by 600bps YoY to 48.9%, however there has been improvement on QoQ by 130bps. Rise in the other cost (+106% YoY & +19% QoQ) impacted operational performance, which led EBITDA to up by 29% YoY to Rs.92.8 crore against our estimates of Rs.111.9 crore. OPM for the quarter contracted by 720bps YoY & 190bps QoQ to 25.1%. Subdued operational performance dented bottom-line growth, however higher other income (+57% YoY) negated the impact to some extent. PAT was up by 30% YoY to Rs.83.2 crore against our estimates of Rs.88.3 crore.

Views: IBB plant operation was disrupted last quarter owing to flood at Mahad, however the situation was normalised during Q3FY22 and thus, better utilisation of IBB should have led higher growth for the quarter. We expect this is missing and thus top line growth was lower than our expected number. Since ATBS has been witnessing strong growth along with decent performance from butyl phenols, one can expect this trend should continue from both of these segments in the coming year. Apart from this, integration with Veeral additives and thereby increasing presence into more anti-oxidants will likely to aid company performance in long run.

Impact: Negative