Vinati Organics Ltd - 524200 - Shareholding for the Period Ended December 31, 2018
Vinati Organics Ltd has submitted to BSE the Shareholding Pattern for the Period Ended December 31, 2018. For more details, kindly Click here03-01-2019
03-01-2019
Vinati Organics: Exit of a major competitor, and market share gains is driving growth
By Suhani Adilabadkar Vinati Organics (which is in 15, mostly bullish stock screeners) is despite its strengths, not an obvious investment for the average retail investor. The word ‘chemical’ brings about a general feeling of disenchantment even among savvy equity investors smitten by auto, banking, FMCG, IT and even telecom (even at a time of poor returns), since they are easily understandable businesses. Chemicals however, are omnipresent in our daily routines, a constant in-demand product - fulfilling the basic principle of long-term value investing. From toothpaste to soaps and detergents to paper, vinegar, salt, paints, resins, cosmetics, everything has a dash of some chemical compound or other making it an integral part of the manufacturing industry and an important part of global economic cycles. Vinati Organics, one of the major commodities and specialty chemical companies, is part of the growing $160 bn Indian chemical industry. The company’s stock has hit successive lifetime highs in 2018 and multiplied investor wealth 10 times over the past 5 years. Quick Takes Established in 1989, Vinati Organics laden with cutting-edge technology has emerged as niche specialty chemical producer. Its main competitor Lubrizol recently exited the business. Lubrizol’s exit in December last year has increased Vinati’s ATBS market share from 40% to 65% in 2018. Vinati Organics is the global leader with more than 60% market share for Isobutyl Benzen (IBB) and ATBS. VO reported Revenue at Rs. 253 cr rising 57% YoY and PAT growing twofold at Rs. 65 cr in September quarter FY19. The company expects to double its revenues in the next three years, with steady margins of 25% and bottom-line galloping at 35-40%. Strong Financial and Chemical Base Established in 1989, Vinati Organics laden with cutting-edge technology, high economies of scale and environment friendly processes has emerged as niche specialty chemical producer over the past 30 years producing aromatics, monomers, polymers and other specialty products catering to automotive, textile, pharmaceuticals, construction and engineering industry. It is the world’s largest producer of jey chemicals including Isobutyl Benzene (IBB), the key ingredient for ibuprofen, and ATBS. The company operates through its two plants at Mahad and Lote Parashuram both situated in Maharashtra. With 70% revenue dependence on exports, Vinati Organics has a strong clientele line-up including BASF, DOW Chemicals, Akzo Nobel, SNF, NALCO, Chemtall, Perrigo, Clariant, and Shasun. The company seems to be on a roll since March Quarter FY18 with the exit of its major competitor, Lubrizol. Thus, with widened market share and higher pricing power, Vinati Organics reported revenue at Rs. 253 cr rising 57% YoY and PAT growing twofold at Rs. 65 cr. EBDITA or operating profit came out at Rs. 95 cr supported by strong product mix and high economies of scale rising more than 100% YoY. EBDITA margin at 37.67% jumped 900 basis points whereas Net Profit Margin expanded 758 basis points YoY reported at 25.72% in Q2 FY19 against 18.14% corresponding quarter previous year. The company stands debt free with strong promoter ownership of 74% and FIIs and DIIs improving their stake to 10.31% in September quarter from 9.68% corresponding quarter the previous year. A global leader for ATBS chemicals Vinati Organics was churned out of obscurity in 2015 as it became global leader for ATBS. The company attained 40% ATBS market share globally. Vinati’s ascendency was further propelled with its debt free status and stock price jumped from Rs.450 levels in 2016 to highs of Rs. 1600 in 2018. Though the market realized it late, the major raison d'etre for its superior return ratios, twofold jump in operating profit and 16% CAGR for PAT over the past five years is its niche product mix. Vinati Organics is the global leader with more than 60% market share for Isobutyl Benzene (IBB), a key ingredient for Ibuprofen. ATBS, the current revenue growth driver is high margin accretive product with wide applications across oil & gas, water treatment, paper, paints, cosmetics, mining, textiles and personal care industry. Widely used for Oil recovery applications, ATBS revenue is highly resilient to oil market mood swings as lower oil prices reduces raw material costs (raw material is mainly crude derivative sourced from refineries) enhancing EBDITA margins whereas higher oil prices increase ATBS demand buffeting company’s bottom-line. Vinati organics initiated backward integration by manufacturing Iso Butylene (IB), a key raw material for ATBS and also caters to 80% domestic demand. The company has further widened its product basket as the largest domestic manufacturer of HPMTBE (High Purity- Methyl Tertiary Butyl Ether) used in pharmaceuticals and organometallic compounds as speciality solvent and also the only manufacturer for TBA (N-Tertiary Butyl Acrylamide) utilized in water treatment and personal care and TOA (N-Tertiary Octyl Acrylamide) extensively used in adhesives and enhanced oil recovery. Gaining rapidly on growth Vinati Organics success mantra is based on three-pronged stringent product selection strategy. Firstly, ability to earn ROI of 20%, production process should be completely environment friendly and existence of strong technical entry barrier. In addition to this filtration process, the product should be easily integrated whether forward, backward or horizontal with its existing product line enhancing margins and improving economies of scale. For instance, IB with its current 30,000 TPA capacity is raw material for both ATBS, its upcoming product butylated phenol and is also sold domestically. Coming to its upcoming product line up, Butylated Phenol has wide applications across industries such as fragrance, resins, lubricants, plastics and inks. It is mainly imported from Singapore and Korea with no manufacturing presence in India. Thus, Vinati Organics is expected to garner 80-70% of domestic market share with its 37000 tonnes capacity to be commercialized by April 2019. But the market stands in waiting for Vinati’s PAP (Para Amino Phenol) project, an intermediate for manufacturing Paracetamol (analgesic and antipyretic drug) with 30,000 TPA capacity. Commercial decisions with respect to its commercialization will be taken after successful trials in its prototype pilot plant within next six months. In addition to all of this, Lubrizol’s exit in December last year has increased Vinati’s ATBS market share from 40% to 65% in 2018 and will be further expanded with capacity expansion undertaken by the company from 26000 TPA to 40,000 TPA to be completed by April next year. IBB capacity has already been enhanced to 25000 TPA last year. The management expects all this to culminate into Rs. 1500 cr revenue in the next three years, growing twofold with steady margins of 25% and bottom-line galloping at 35-40%. This seems to be tempting enough for a long-term sturdy portfolio.13-12-2018
Statement Of Investor Complaints For The Quarter Ended September 2018
No.of Investor complaints pending at the beginning of the quarter No.of Investor complaints received during the quarter No.of Investor complaints disposed of during the quarter No.of Investor complaints unresolved at the end of the quarter 0642 Name of the Signatory :- MILIND WAGHDesignation :- Company Secretary and Compliance Officer12-10-2018
Shareholding for the Period Ended September 30, 2018
Vinati Organics Ltd has submitted to BSE the Shareholding Pattern for the Period Ended September 30, 2018. For more details, kindly Click here10-10-2018
Compliance Certificate For The Half Year Ended 30.09.2018 Under Regulation 7(3)
Regulation 7(3)10-10-2018
Transfer Of Equity Shares Of The Company To Investor Education And Protection Fund (IEPF)
Transfer of Equity Shares of the Company to Investor Education and Protection Fund (IEPF)11-09-2018
Announcement under Regulation 30 (LODR)-Analyst / Investor Meet - Outcome
Q1 FY2019 Post Results Analyst and Investor Conference Call transcript13-08-2018
Announcement under Regulation 30 (LODR)-Analyst / Investor Meet - Outcome
Q1 FY2019 Post Results Analyst and Investor Conference Call transcript13-08-2018