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C O M P A N Y R E P O R T
India
27 Sep 2011 Vinati Organics Rs 67.5
S e c t o r : C h e m i c a l C a r v in g N i c h e s o f G lo b a l - s c a l e
o...
BSE Sensex 16,524
Nifty 4,971
52 week high (Rs) 97.4
52 week low (Rs) 61.1
Bloomberg VO:IN
NSE VINATIORGA
BSE 524200
Equity Shares (m) 49.37
Face Value (Rs) 2
Market Cap (Rs mn) 3335
Share Price Performance (%) Vinati Sensex
1 week -2.53 -3.36
1 month 6.38 4.26
3 month -6.31 -10.26
6 month -3.22 -12.18
1 year -14.28 -17.86
Shareholding Pattern (Jun’11)
Promoters 74.99 FIIs - DII 0.05 Bodies Corporates 1.73 Others 24.96
Vinati Organics (Vinati) is a specialty chemical company with a truly differentiated
business, specializing in growing niche products into global scale. Having already
attained global leadership in its two key products – IBB, and ATBS, Vinati is now
rapidly diversifying its product mix, while keeping its business model intact. While
this transition is on, the company has also delivered standout numbers in terms of
sales growth, profitability and capital efficiency.
Diversifying sales mix: While IBB contributed as much as 70% of sales in FY07, by
FY13, its share will be down to 18-20%. The single largest contributor to sales would
be ATBS, which has the potential to grow for several years at double digit rates,
driven by new applications and growth in existing applications.
Growing strongly: Its performance of FY07-11 has been standout. Sales have grown
at over 40% CAGR. EBITDA margin has expanded to over 20%. ROE and ROCE
are at 43% and 34% respectively. The current product mix has enough ammunition to
drive revenue growth at more than 30% over FY11-13. Vinati also has a robust
product pipeline, which could drive sales beyond FY13.
Differentiated business model: Vinati’s global leadership in its key products and
high margins are not by accident. The company has a clear focus on entering only
niche chemical products, where technology is not easily available. The company has
the ability to source the right lab-scale technology and then scale it up to commercial
levels. It appears this is a skill set its peers cannot easily replicate.
Reducing risk: The risk profile of the company reduces with each year. The
dependence on IBB is less. Cash profits crossed Rs 520mn in FY11, giving Vinati
greater internal resources with which to plan expansion.
Vinati is a good stock for investors with a medium to long term holding horizon.
The stock can outperform due to both its superior growth rates, and likely re-
rating, as investors give weight to the company’ differentiated business model.
Our price target for March’13 is Rs 120, based on PE of 8x.
FY'08 FY'09 FY'10 FY'11 FY'12E FY'13E
Revenue 1463 1905 2318 3167 4226 5867
Revenue growth (%) 78.3 30.2 21.7 36.7 33.4 38.9
EBITDA 253 340 527 640 823 1207
EBITDA margin (%) 17.3 17.8 22.7 20.2 19.5 20.6
PAT 152 251 400 520 530 757
ROE(%) 41.9 46.7 48.8 42.8 31.2 32.3
ROCE(%) 33.8 31.9 34.3 30.0 25.6 27.6
P/E (x) 4.7 2.8 8.8 6.6 6.3 4.4
EV/EBITDA (x) 4.1 3.5 7.9 6.4 5.0 3.1
(Rs mn unless stated)
Company Report: Vinati Organics 27 Sep’11
Four-S Research 2
Investment Rationale
Business with a moat
“In business, I look for economic castles protected by unbreachable ‘moats’.”
-Warren Buffett
Vinati is amongst
top global
producers in its
product lines,
helped by
technology
leadership
You don’t normally associate an SME business with ability to break into
exiting global business bastions and achieve with global leadership. SMEs are
generally me-too players. There are dozens of such listed me-too companies in
practically all sectors - IT, pharma, textiles, construction, real estate, chemicals
etc.
Specialty chemicals industry is also not without its fair share of me-toos. There
are several producers of textiles chemicals, leather chemicals, construction
chemicals, plastic additives – all of which you may classify under ‘speciality
chemicals’.
Vinati is different. This is not by accident; this is by careful thought, planning
and rigorous management discipline. Very early on, the Vinati management
decided the criteria on which it would grow: look for products where it could
achieve global leadership, where margins were good, and technology hard to
come by. As you can guess, some of these factors are inter-related. Margins
wouldn’t have stay good for too long, if technology was easily copyable. With
this background, now look at Vinati’s product folio.
IBB: purer than thou
Leading global
producer of IBB,
technology scaled
up in-house
Vinati’s first product was Isobutylbenzene (IBB), where it is today the global
leader. It has about 60-65% of the global market. Vinati has maintained its
leadership in this market for quite some time now. Check some features of this
business. Vinati got the basic technology done from a French lab, and figured
out on its own how to scale it up to commercial levels. And now, Vinati can
make this product with a purity level better than anyone else in the world. The
result: a secure market, most leading global buyers are its customers. There
you have it: a business with a moat.
ATBS: history repeats itself
Second largest
global producer of
ATBS
The success with 2-Acrylamido 2-methylpropanesulfonic Acid (ATBS) proved
Isobutylbenzene (IBB) was not an accident.. Here again, Vinati is now the
largest producer in the world. There is no competition in India, or anywhere
else in the developing world, and no new capacities are coming up in the
developed world.
We think Vinati has provided ample proof that it can build globally relevant
businesses, with a technology edge, thereby deriving and maintaining strong
margins.
Company Report: Vinati Organics 27 Sep’11
Four-S Research 3
Aggressive growth performance
The numbers Vinati has delivered in the last few years are what any listed
company would be proud of. Revenues have grown at over 40%, EBITA has
grown at 78% and PAT at 89%.
On a strong growth path in recent years
Impressive margin performance
Vinati’s strong growth in top line has come with strong profitability
performance. The latter is a clear reflection of the success of its management
philosophy of building businesses with superior economic characteristics
Margins have improved, a testimony to its technological leadership
Enough drivers for future growth
ATBS market still growing, new products lined up to
There are more than enough drivers to push the future growth for Vinati
Organics. Carefully calibrated capex strategy to expand the production
capabilities will drive the top line for coming years. Installed capacity is
expected to reach from current levels of 38,500TPA to 46,000TPA by this year
2007 2008 2009 2010 2011
PAT 41 152 251 400 520
EBITDA 86 253 340 527 640
Revenue 820 1,463 1,905 2,318 3,167
0
500
1,000
1,500
2,000
2,500
3,000
3,500R
s m
n
Growth in Revenue, EBITDA and PAT historically
0%
5%
10%
15%
20%
25%
FY'07 FY'08 FY'09 FY'10 FY'11
Consistently bettering margins
EBITDA margin
PAT margin
Company Report: Vinati Organics 27 Sep’11
Four-S Research 4
drive continuing growth
end and 60,000TPA by FY13. Being world leaders in the major segments it
operates in and by being preferred vendor of its major customers, Vinati will
continue to enjoy high demand from its customers. The company is also
looking to venture into some high technology, high return special chemical
products; its R&D team expects breakthrough in a few areas it is working on.
The company is banking on similar strategy to build capacities, like it did with
IBB or ATBS, once these technologies become commercially feasible.
Strong balance sheet
Conservative financials
Vinati has always
maintained a strong
balance sheet
The prudence on the P&L side – what to produce and how much – also extends
to the balance sheet side. Vinati has always had conservative financials, and it
continues to do so even now. Its balance sheet ratios are much better than peer
group.
For example, Vinati ended FY11 with a debt equity ratio is 0.5, presenting
eminent possibility to management for financial leverage. Strong management
of balance sheet numbers has ensured good capital efficiency. Vinati’s ROE
and ROCE ratios at 43% and 34% respectively are also substantially better
than most competition.
ECB, FCCB combo at good terms
Obtained loan from
IFC at favourable
terms
An interesting point is the funding route it took in FY11, as part of its last
round of expansion. The company raised US$ 16mn from IFC through FCCB
and ECB route. Out of this only US$5mn FCCBs are issued by company as of
now to IFC with conversion price of Rs 100 per equity share. This funding is
available to Vinati Organics at generous rate of around 3-4%. Although Vinati
Organics has not used or taken disbursement of this fund, this shows Vinati
Organics’ strong financial condition.
Business is derisking
The company’s
expanding size will
reduce many of the
traditional SME
risks
One reason why SMEs get low discounting from the market is the higher
business risk. You can break down this risk into many parts:
Financial: ability to service debt, ability to withstand sudden changes
in cash flows, ability to finance growth etc
Operational: ability to sustain margins, ability to negotiate with
suppliers.
HR: ability to attract and retain talent
And so on. You could add a few more bullets here. As companies grow, this
risk reduces.
Vinati, we believe, is rapidly crossing important milestones in this derisking
process. In its current lines of business, Vinati has very little demand side risk.
It has several key global chemical majors as its customers, many of whom are
relationships of several years.
Financial risk for the current round of expansion is well covered. This round of
Company Report: Vinati Organics 27 Sep’11
Four-S Research 5
capacity expansion will take Vinati to a revenue size of Rs 5.51bn, and a net
profit size of Rs 757mn. This makes it financially highly secure.
Business Portfolio Risk
Sales mix has
diversified
considerably,
reducing
dependence on IBB,
a mature product
Let’s take an easy one first. In the last few years, the sales mix has changed
sharply. Whereas a few years ago, Vinati was heavily dependent on IBB, now
there are more products in its product line. So while you could say earlier:
What if the IBB market collapses? What if a new producer enters the market?
(while none of this happened) – The risk from such events is much less now.
The product mix is diversifying; the company is less dependent on any one
molecule.
What’s more, ATBS, the biggest revenue earner now, is still in early stage of
its product life cycle. New applications are emerging, and the management
believes there are more as yet undiscovered applications. In other words,
ATBS market can be much bigger.
This is not all. The management is working on several new products. The
business mix could look very different 3-5 years down the line. Management
already has announced introduction of 4 new products in portfolio by the mid-
end of FY13 with overall capacity of 15050TPA. These could yield a sales of
around Rs 125 crore.
New Products Capacity (TPA) DAAM 1000 HP-MTBE 6000 DIB 5000 DEA 3050
Growth risk
Strong cash flows
give Vinati an
enhanced ability to
finance growth
Will the company be able to finance growth? – This is a critical question you
can ask about many SMEs. With Vinati, given its superior margins and strong
cash flow, this issue is rapidly becoming less important.
For FY11, its operating cash flow was Rs 313mn. At this number it becomes
far easier for Vinati to expand, compared to say in FY07, when the operating
cash flow was Rs 15.6mn.
In other words, Vinati is reaching a sort of critical mass. From here on, the
growth risk – ability to finance growth – reduces significantly.
Attractive Valuations
There is little
downside risk at
current valuations.
We expect 15%
returns based on
FY12 numbers
Vinati, we believe, is a good bargain at current levels. The forward PE has
drifted downward over the last few months, indicating the market is not quite
factoring in the growth likely to happen at Vinati.
Our price target of Rs 120 for March’13 is based at a PE of 8x. We believe
given superior business model of the company, its valuations would trend up
over a period of time.
Company Report: Vinati Organics 27 Sep’11
Four-S Research 6
Risk factors
Few products in its sales mix …. Company mitigating it by
improved product portfolio
Company working
on this risk with
planned further
diversification of
revenue mix
High dependency of Vinati Organics on its two flagship products i.e. ATBS
and IBB might give some jitters to its probable investors. Although Vinati is
world leaders in those markets, any disruption in these product markets will
impact Vinati organics badly.
Historical record suggests that demand and profitability have been reasonably
secure for Vinati. In IBB, its oldest product, Vinati has shown consistent sales.
Vinati is looking to diversify this risk by expanding its product portfolio to
include other special chemical products.
High promoter holding
High promoter
holding is one
reason for low
trading in the stock
Promoters hold almost 75% stake in Vinati Organics resulting in lower free
float for investors. This has resulted in low trading volumes for the scrip.
Company Report: Vinati Organics 27 Sep’11
Four-S Research 7
Peer Benchmarking
The peer set: midcap speciality Chemical companies
Vinati is a speciality
chemical company
With a market capitalisation of around Rs 3.35bn, Vinati is a midcap speciality
chemical company. The table below gives key headline data for the midcap
chemical space. As can be seen, while Vinati is smaller than the median
comparable in this list on the basis of sales figures, however, in terms of
profitability of the business, whether via EBITDA or PAT, Vinati scores way
better compared to almost all peers.
The wide dichotomy in business parameters like operating margins is
explained by the fact that several of the peers in chemical space are more into
commodity chemicals, rather than truly speciality chemicals. Himadri and
Clariant, and Balaji to some extent, are the companies which come closest to
Vinati in terms of profitability of the business.
Himadri Chemicals is a leading manufacturer in its major products: coal tar by
products and derivatives. Clariant is a global chemical giant with strong
technological competency. Balaji Amines manufactures a class of chemicals
called ‘Aliphatic Amines’. Its story is similar: amine technology is a closely
guarded process with only a few handful companies having access to such
technology. Balaji developed its technology indigenously and has improved it
further over a period of time.
Company Market
Cap EV Sales
Sales 3 yr CAGR
(%) EBITDA EBITA
Margin (%) PAT
PAT 3 yr CAGR
(%) Aarti Industries 3,602 8,759 14,839 1.1 1,979 (10.7) 815 (3.2)
Balaji Amines 1,110 2,674 3,571 19.1 629 31.5 266 32.7
Chembond 1,208 1,332 2,068 20.6 254 50.5 135 29.7
Clariant 19,422 19,224 9,747 2.7 1,585 21.8 1,124 29.5
Deepak Nitrite 1,777 2,334 6,722 8.4 570 2.7 258 (8.6)
Himadri Chemicals 18,824 26,237 7,001 36.0 1926 49.5 1,144 56.0
Shasun Chemicals 3,274 6,447 8,397 6.0 762 NA 266 NA
Thirumalai Chemicals 742 3,131 7,685 27.8 461 NA 184 NA
Average 6,245 8,767 7,504 15.2 1,021 24.22 524 22.7
Vinati 3,335 4,085 3,167 28.9 640 37.2 520 43.8
(Rs mn, unless specified)
Comparing key P&L items
Note the CAGRs
The key factor to note in the above table is the 3 year CAGR ratios for sales,
EBITDA and net profit. On each of those counts, Vinati fares on par or better
than peer averages. If compared with better valued peers like Himadri
Company Report: Vinati Organics 27 Sep’11
Four-S Research 8
Sales and net
profits have grown
at 30-40%.
Chemicals and Clariant, Vinati Organics performs exceedingly better than
Clariant and comes close to performance of Himadri Chemicals on all the
fronts.
Vinati has maintained these outstanding CAGRs for last three years resulting
from strategy of building up the scale for its niche products once commercial
technology is developed which is not easy to imitate. Vinati has expanded its
ATBS plant from 5000TPA in 2009 to 12000TPA in 2011 resulting in better
growth in sales and also in EBITDA and PAT.
While the growth rate will slow down somewhat over the next 1-2 years, we
still expect growth of more than 15% in revenues and earnings. Similar growth
rate is expected in further future with new products coming into picture in full
force.
Profitability: Impressive past margins with confident outlook
Vinati’s operating
margin is much
better than peers
Vinati Organics has achieved impressive margins historically, achieved
consistently year by year. Vinati achieved 22% EBITDA margin and 16% PAT
margin for FY11 which is well above their industry peers posting 13%
EBITDA margin and 9% PAT margin.
Vinati has improved its margin level steadily from EBITDA 10.5% in FY07
and 4.9% of PAT margin to margins of current levels signifying improving
business mix and operational excellence. This consistent improvement in
margins for Vinati is result of company’s strategy to develop high margin
product and build capacity for the same. This is evident from current product
portfolio with ATBS contributing to 55% of its top line.
While compared to Himadri Chemicals and Clariant, Vinati scores better than
Clariant on PAT and EBITDA margins and is at par with Himadri Chemicals
on PAT margin showcasing that Vinati Organics’ profitability performance is
at par with the best in its peers.
FY11 Margin (%)
Company EBIDTA PAT
Aarti Industries 13.3 5.5
Balaji Amines 17.6 7.5
Chembond 12.3 6.5
Clariant 16.3 11.5
Deepak Nitrite 8.5 3.8
Himadri Chemicals 27.5 16.3
Shasun Chemicals 9.1 3.2
Thirumalai Chemicals 6.0 2.4
Average 13.8 7.1%
Vinati 20.2 16.4
Company Report: Vinati Organics 27 Sep’11
Four-S Research 9
Balance sheet ratios
Much better on leverage compared to peers
Debt Equity Interest Coverage Company FY10 FY11 FY10 FY11 Aarti Industries 1.0 1.0 2.4 2.6
Balaji Amines 1.1 1.5 3.8 4.0
Chembond 0.4 0.7 7.2 9.9
Clariant 0.0 0.0 141.0 610.4
Deepak Nitrite 0.4 0.3 3.8 7.1
Himadri Chemicals 0.6 1.0 3.7 5.4
Shasun Chemicals 2.8 3.9 -0.8 1.2
Thirumalai Chemicals 2.3 2.0 2.1 1.8
Average 1.1 1.3 3.2* 4.6*
Vinati 0.6 0.5 10.5 12.3
*excluding Clariant ratios
Only Clariant,
which is an MNC,
has better balance
sheet ratios than
Vinati
Chemical industry is more capex driven with organizations trying to gain scale
to improve operating margin putting strain on their balance sheet. But
compared to industry peers and industry averages, Vinati Organics has much
better debt-equity ratio and interest coverage ratio signifying solid financial
position. D/E and interest coverage ratio better than even Himadri Chemicals
denotes Vinati Organics’ prudent conduct while considering debt option for
capex.
Vinati has also displayed remarkable sagacity in choosing which debt to take
and from where. In January’11, Vinati got approval for a funding of $16mn
from IFC in ECB and FCCB at approximately 3% interest rate. The exchange
rate risk is naturally hedged, given exports that Vinati does. Also, the IFC loan
is certainly good for its profile value.
Better liquidity ratios
Vinati has better liquidity ratio as compared to almost all of its peers for both
current ratio and also cash ratio. This denotes Vinati has much better ability to
meet both its short term and long term obligations compared to most of its
peers, putting company at in better position to leverage its financials.
Vinati Organics’ demeanour to keep its liabilities in check while keeping eye
on its assets is visible from its consistent better current ratio for last few years.
Among its peers only Himadri Chemicals has scored better than Vinati
Organics here. Whereas Vinati Organics has ratios much higher than peer
average.
Company Report: Vinati Organics 27 Sep’11
Four-S Research 10
Current Ratio Cash Ratio Company FY10 FY11 FY10 FY11 Aarti Industries 2.8 3.0 0.0 0.0 Balaji Amines 3.2 3.5 0.1 0.1 Chembond 2.2 2.5 0.1 0.3 Clariant 1.3 1.0 0.0 0.1 Deepak Nitrite 2.5 2.4 0.1 0.1 Himadri Chemicals 6.0 6.7 0.2 0.4 Shasun Chemicals 1.9 1.7 0.0 0.1
Thirumalai Chemicals 2.1 1.7 0.0 0.0 Average 2.7 2.8 0.1 0.1
Vinati 4.8 4.2 0.1 0.1
Better capital efficiency
Exceptional ROE
and ROCE
Higher profitability due to efficient management and impressive product
portfolio is evident from much higher ROE and ROCE ratio than almost all of
its peers. Only Clariant, which has global leadership in several areas, has
comparable or better numbers. This signifies Vinati Organics’ management has
managed to take correct decisions to invest money in right technology and
products.
ROE (%) ROCE (%)
Company FY10 FY11 FY10 FY11
Aarti Industries 19.9 16.9 14.5 15.3
Balaji Amines 25.9 26.5 20.3 23.4
Chembond 27.2 24.1 32.2 29.5
Clariant 32.5 31.5 42.1 39.5
Deepak Nitrite 9.2 11.3 10.7 12.8
Himadri Chemicals 19.2 14.5 11.1 11.2
Shasun Chemicals -20 26.5 -5.7 9.0
Thirumalai Chemicals 46.0 17.7 14.5 9.7
Average 20.0 21.1 17.5 18.8
Vinati 48.8 42.8 34.3 30.0
Company Report: Vinati Organics 27 Sep’11
Four-S Research 11
Comparing Peer Valuation
Company CMP
(`Rs) Market Cap EV P/E (x) EV/
EBIDTA (x) D/E (x)
Aarti Industries 47.0 3,602 8,759 4.4 4.4 1.0 Balaji Amines 34.3 1,110 2,674 4.2 4.3 1.5
Chembond 190.0 1,208 1,332 8.9 5.2 0.7
Clariant 728.5 19,422 19,224 17.3 12.1 0.0
Deepak Nitrite 170.0 1,777 2,334 6.9 4.1 0.3
Himadri Chemicals 48.8 18,824 26,237 16.5 13.6 1.0
Shasun Chemicals 67.5 3,274 6,447 12.3 8.5 3.9
Thirumalai Chemicals 72.5 742 3,131 4.0 6.8 2.0
Average 6,245 8,767 9.3 7.4 1.3
Vinati 67.6 3,335 4,085 6.4 6.4 0.5 (Rs mn unless otherwise specified)
Vinati deserves a
premium over peer
group in valuations
Vinati Organics is currently quoting at a discount to peer group averages on
both P/E and EV/EBITDA ratios. We believe Vinati Organics should quote at a
premium to peer averages given its superior management quality, strong
leadership in its product lines, technological edge, better capital efficiency and
better balance sheet quality.
The valuation numbers reflected in the above table which place Vinati
valuations in line with, or marginally lower than its peers, do not quite reflect
the business fundamentals.
Company Report: Vinati Organics 27 Sep’11
Four-S Research 12
Likely growth not captured
Given expanding
size, strong
profitable growth
rate, Vinati’s
valuation is set to
expand
We believe Vinati
valuations will
expand if it shows
P&L growth in
FY12
Vinati has consistently traded above 5x forward PE barring a brief period in
2008 when the global financial crisis pulled every stock down. The stock also
enjoyed a valuation of above 7x in FY10 and FY11.
Valuations have drifted downward in recent months, an indication that the
market perhaps doubts the company’s ability to maintain strong growth. There
is certainly a flat profit outlook for FY12, but Vinati should return to growth in
FY13 as new products enter production. There has also been a marginal delay
in capacity build up at the ATBS unit, by 4Q FY12, ATBS will be at full
capacity as well.
We believe the market will bid up the valuations once its sees continued
growth coming in from ATBS and the couple of niche compounds the
company has recently introduced.
While we think Vinati deserves a premium valuation as stated above, we are
basic our price target on Vinati matching peer averages by FY13.
At a PE of 8x, we expect a price of Rs 120 by March 2013. This corresponds to
an EV/EBITDA of just over 5x, which is still less than peer averages.
Key Valuation Ratios
FY'09 FY'10 FY'11 FY'12 FY'13E
P/E Ratio (x) 2.8 8.9 6.4 6.3 4.4
EV/EBITDA (x) 3.5 7.9 6.4 5.0 3.1
EV/Sales 0.6 1.8 1.3 1.0 0.6
Dividend Yield (%) 3.5 1.4 1.9 2.0 2.8
0
20
40
60
80
100
120
16-Sep-07 16-Sep-08 16-Sep-09 16-Sep-10 16-Sep-11
Rs
1yr Fwd pe band chart
9x
7x
5x
3x
Valuation: Price Target
Company Report: Vinati Organics 27 Sep’11
Four-S Research 13
Vinati - Business model
Vinati is highly
focussed on
profitable niches
Vinati Organics Limited was established in 1989. It is focused on
manufacturing speciality chemicals with the help of best in class technology
and efficient manufacturing process.
Within the field of speciality chemicals also, Vinati has been very choosy in
what to do. It has consistently worked to find niches where it can build viable
technologies and build global leadership. This has worked very well till date
for Vinati Organics. It has managed to maintain strong focus on R&D, has
found and captures niches, and overall has managed to grow revenues while
maintaining good profitability.
Focus on Higher Margin Products
Has consciously
chosen high margin
chemicals
Vinati has always concentrated on higher margin products and historically has
managed to maintain better margins than other peers. Vinati started with IBB
in 1992, then developed capability to manufacture higher margin ATBS which
pushed its overall margins to the current level. With an aim to expand margins
further, Vinati is expanding current ATBS capacity and also has plans to
manufacture other higher margins products like Diacetone Acrylamide
(DAAM), High Purity Methyl Tert Butyl Ether (HP MTBE) and Di-Ethyl
Aniline (DEA) in near future.
Vertical
integration
Vinati has also integrated backward for further improving margins by setting
up an IB plant. IB is major component in ATBS production and a major cost
factor too. With in-house IB capacity Vinati looks to better margins for ATBS
by at least 2-3%. Also new DIB plant will work as further forward integration
for IB plant utilising surplus IB plant capacity than current ATBS
requirement.
Positioned for continuing growth
ATBS volumes will
expand into FY13
New products such
as HP-MTBE,
DEA, DIB to be
added
The company is undertaking major capacity expansion projects currently
where it would be expanding ATBS product line from current 12000TPA to
18000TPA by Dec 2011. ATBS is one of the company’s higher margin
product. Vinati has already done backward integration for ATBS by setting up
an IB plant which is major component in ATBS.
Vinati Organics is also setting up a facility to start production for new high
margin products: High Purity Methyl Tert Butyl Ether (HP-MTBE) 6000TPA,
Di-Ethyl Aniline (DEA) 3050TPA, and Di-IsoButylene (DIB) 5000TPA along
with capacity expansion for: N-Tertiary Butyl Acrylamide (TBA) and
Vinati’s Business
Company Report: Vinati Organics 27 Sep’11
Four-S Research 14
Diacetone Acrylamide (DAAM). The company will have a capacity of
1000TPA for DAAM and 1000TPA for TBA by this Dec 2011.
This expansion plans show the company’s craving for growth and confidence
in their capability to venture into newer products.
Aggressive Growth in Production Capacities
All fig in TPA
Products ATBS: Key to growth
ATBS is the new
flagship product
2-Acrylamido 2-methylpropanesulfonic Acid (ATBS) has become the flagship
product from Vinati Organics. Vinati Organics is second largest producer of
ATBS in the world after Lubrizol of USA. Vinati started production of ATBS
in 2002 with a plant at Lote, in Maharashtra, with capacity of 1000TPA. The
company was attracted into ATBS production not only to diversify its product
line, but also by the high margin from the segment. With growing demand for
ATBS across globe from customers of various industries like oil industry to
water treatment to acrylic fiber and technology barrier for new entrants to enter
in this market Vinati Organics has strike the right note here. These factors will
help Vinati Organics to maintain higher margins for ATBS. Vinati since then
has progressively built-up the capacity for ATBS, making it the biggest
contributor to top line by 2011. The company currently has a capacity
12000TPA for ATBS, with plans to expand it to 18000TPA by Dec 2011.
Company Report: Vinati Organics 27 Sep’11
Four-S Research 15
0
5000
10000
15000
20000
2002 2006 2009 2011 2012E
ATBS Capacity
All Figures in TPA
ATBS capacity set
to expand to 18,000
tons by Dec’11
ATBS: Limited supply, increasing market demand
Entry in ATBS market has done wonders for Vinati Organics. ATBS market is
not only growing rapidly, driven by its use in various new and emerging
applications, but supply of ATBS is stagnant. Most competitors have stagnant
capacity and no known plans for expansion. This gives Vinati Organics ample
opportunity to capture the growing ATBS market.
ATBS growth is
getting driven by its
use in new
applications.
High oil prices will
benefit ATBS
demand
ATBS : Wide applications with many unexploited opportunities
Acrylic fibre: ATBS is widely used in acrylic fibre industry where it is applied
on the fibre before fibre dying process.
Oil Fields: ATBS is used in oil fields in deep-drilling situations, where
ATBS’s characteristics of high stability at higher temperature and higher
salinity help. With global oil prices consistently going up oil companies are
getting more convinced to go deeper to dig out oil to improve recovery factor
of their oil wells. This has opened up a large market for ATBS applications as
ATBS’s higher cost will be rationalised by ever increasing oil prices.
Water Treatment: ATBS is used effectively in Boiler plants and Cooling
Tower as corrosion inhibitor for silt control. Due to its special characteristics
ATBS is used to improve corrosion resistance and as a de-scaling agent in
-
500
1,000
1,500
2,000
2,500
3,000
3,500
0%
10%
20%
30%
40%
50%
60%
FY'07 FY'08 FY'09 FY'10 FY'11
ATBS % contribution to topline
ATBS
Total
All Figures in Rs mn
Company Report: Vinati Organics 27 Sep’11
Four-S Research 16
boilers. In cooling towers again, ATBS is used as descaling agent.
Other: ATBS is also used as by many industries like paper industry, mining
industry as a flocculent agent. ATBS is also used in personal care products like
shampoos etc as surfactant. It is also used in high rising tower/building
construction sites for other uses.
Unexploited opportunities: Vinati maintains the view that many unexploited
application exists for ATBS which will increase ATBS market exponentially
in near future.
Products Isobutyl benzene (IBB): Market Leaders with stable market
Almost 2/3rds
share of the global
market in IBB
Vinati Organics is the largest manufacturers of Isobutyl benzene (IBB) in the
world with 14000TPA capacity and annual production of 12000 tonnes. Vinati
holds almost 60-65% of total IBB market worldwide, in a worldwide market of
20,000TPA.
IBB is the first specialty chemical product from Vinati Organics, which they
started producing in year 1992 with capacity of 1200TPA. Periodic capacity
expansions driven by strong export growth has led the company to become the
world’s largest manufacturer of IBB with a strong customer base across the
world.
IBB tech not freely
available
Vinati has sourced the technology to manufacture IBB is from Institut Francais
du Petrole (IFP) in France on which it did internal research to make it
commercially viable, becoming the first company to manufacture IBB based
on this technology. With this technology Vinati Organics has managed to
manufacture IBB with record purity level 99.8% against prevailing
international standards of 95.5% purity. This showcases company’s capacity to
adopt latest sophisticated lab based technology and to convert it into very
successful commercial technology with the help of in-house research center.
But it is a mature
product now
Starting with modest capacity of 1200TPA in Mahad, Maharashtra, Vinati
steadily grew its production capacity to present capacity as shown in the graph
below. With higher operating efficiency and by wining trust from their client
Vinati Organics has managed to win all the major clients from its competitors
pushing them out of competition.
0
5000
10000
15000
1992 1996 1997 2006 2008
IBB Capacity (TPA)
Company Report: Vinati Organics 27 Sep’11
Four-S Research 17
IBB was the key product for Vinati Organics since its inception for almost 2
decades, before ATBS overtook it in FY11. IBB reached revenue of Rs 1.02bn
in FY11.
With the recent stagnant nature of the IBB market and comparative lower
margins Vinati has no plans to increase capacity here, with more focus on de-
bottling and improving efficiencies on operational side to improve bottom line
for IBB segment.
Application Pharma: Major Pharma customers with some use in perfume industry
IBB is used as basic raw material for manufacturing the bulk drug Ibuprofen
which is used as an anti-inflammatory analgesic. IBB is the major raw material
for Ibuprofen bulk drug which is produced in mass volume all over the world.
It is also used in perfume industry in Europe.
IB: Backward Integration with focus on ATBS margins
Set up an IB unit as
a backward
integration to
ATBS
Vinati has ventured into backward integration for ATBS line by setting up a
12,000 TPA Isobutylene (IB) production facility in its Lote premises. Of the
total IB capacity, up to 60% production will be used captive for the ATBS
plant where Isobutylene (IB) is major constituent.
When the company reaches its full capacity of 18000TPA for ATBS, it will use
around 6500Tonnes of IB for captive use, with the rest of IB production to be
sold in open market.
The company plans to sell rest of IB production in domestic market which has
approximate market of 3-4000TPA as also looks to sell in Asia region as Asia
is shortage of IB in market recently.
With largest manufacturing capacity for IB in India with only other close
competitor Salva Chemical with much lower capacity (4000TPA), Vinati
Organics is set to gain leading position in this market segment too.
Applications
Whereas IB will be used in Vinati Organics to manufacture in ATBS, IB is also
used to produce Isooctane which is used as fuel additive. Isobutylene is also
used in the production of methacrolein. Polymerization of isobutylene produces
butyl rubber (polyisobutylene). IB is also in Agro-chemical industry as an
active ingredient for pesticides. Many pharmaceutical companies are also doing
research to come up techniques to efficiently use IB for their process.
Venturing into new products
DAAM is a low
volume, but high
margin product
DAAM
The first new product coming is DAAM, with a 1000TPA plant setup, at the
Lote site by Dec 2011. This is a high margin product with much higher
realisation value than other products in Vinati’s portfolio. With expectation to
contribute more than Rs 300mn at full capacity DAAM will push Vinati’s top
line and margins further.
Company Report: Vinati Organics 27 Sep’11
Four-S Research 18
August’11 announcement
3 new products
announced in
Aug’11
Vinati Organics announced three new products in August 2011. These are:
High Purity Methyl Tert Butyl Ether (HP-MTBE), Di-Ethyl Aniline (DEA) and
Di-IsoButylene (DIB). All these are linked to the production chains involved in
existing product lines of Vinati. Hence the capacities will come up at their
existing plant locations Mahad and Lote. These products will entail a capex of
Rs 500mn with company aiming to complete capex by second quarter of FY13.
These follow the usual Vinati new product route: identify molecules with
limited competition and develop technology through research tie-ups and in-
house resources.
HP-MTBE: Ingredient for Pharma company
Main raw material
same as IB With domestic market size expected to be larger than 3000TPA and lone Indian
supplier Savla Chemical meeting only half of this demand, Vinati Organics is
aiming to capture and grow the market with a new 6000 TPA setup. The
company holds the advantage of experience of main raw material MTBE,
which is also the raw material for its other product IB. Vinati Organics has
developed technology for HP-MTBE in-house with some external aid. HP-
MTBE is expected to contribute around Rs 320mn to company’s top line at full
capacity.
Di-Ethyl Aniline (DEA) Ingredient for agro- industry, perfume and
healthcare industry
Will be sole
manufacturer of
DEA in India
Introduction of DEA presents Vinati Organics with a domestic market of
1700TPA which is expected to reach 2500TPA soon. There is no domestic
manufacturer, providing ideal opportunity to capture entire import market with
right pricing strategy. With a setup of 3000MT, easy availability of its raw
material locally and in-house developed technology with some external aid,
Vinati will be well positioned to become lone and largest manufacturer of DEA
in India.
Di-IsoButylene (DIB): Intermediate for chemical industry
DIB as forward
integration to IB
plant
Similar to other products, Vinati Organics has again chosen to enter this
product as there is no domestic competitor in India. Local consumption is
currently around 1500TPA, met through imports, and with potential to reach
3000TPA in next two years. DIB also has a potent export market in China as
major players in DIB are present only in US and Europe. DIB will also act as
forward integration for its existing IB plant with DIB utilising surplus capacity
of IB plant as its ingredient.
Pipeline
Para amino phenol
PAP currently at
pilot plant stage.
While the company now has several molecules in the pipeline, the big one,
which it has publicly mentioned so far, is para amino phenol or PAP for short.
Company Report: Vinati Organics 27 Sep’11
Four-S Research 19
Company could
decide by Dec’11
The company is working on pilot plant, and if that is successful, they will go
for commercial manufacture. The decision on this could be taken by
December’11.
PAP is potentially a big product, which can make a significant contribution to
the top line.
Revenue Mix: Focus on Diversification
Share of IBB now
down to 32%
Vinati’s revenue is driven by two major products, IBB which was their prime
product for almost 2 decades, and ATBS which is Vinati Organics’ current
focus. Vinati is progressively diversifying its product portfolio moving from
single product era a decade back to more than 4-5 products under its current
portfolio. With existing plan to introduce few more products in its pool,
revenue mix will further diversify. Vinati by choice has maintained limited
product portfolio as company believes in entering into niche speciality
chemical segment only, with the goal to hold leading position in each of the
segment’s market.
Starting with single product portfolio with IBB in 1992 Vinati now has
multiple products under its kitty other than IBB like ATBS, Na-ATBS, IB,
TBA, DAAM and many more in the pipe line. This has helped Vinati to come
out of situation of over dependence on single product while still maintain
leading position in their product segments.
Global scale of operations
Vinati exports 75%
of its turnover
Vinati Organics exports nearly 75% of its production to USA, Europe, Asia,
Middle East and China, and has some of the largest chemical companies in the
world as its clients. Its top five customers constitutes about 40-50% of top line
0%
20%
40%
60%
80%
100%
FY'07 FY'08 FY'09 FY'10 FY'11
Increasing diversified Revenue Mix
Other-products
NA-ATBS
ATBS
IBB
Company Report: Vinati Organics 27 Sep’11
Four-S Research 20
Financial Analysis and Growth Outlook
Revenue grew at 41% CAGR for last 5 years
Despite having seemingly few products in its portfolio, Vinati Organics has
maintained a scorching pace of growth in recent years.
New products have
driven revenue
growth
The Company’s net revenues grew at a CAGR of 41% over FY’07-’11 to Rs
3.25 bn from Rs 820mn in FY07. The growth has been driven by major
capacity expansions in last few years along with entering into new product
segments.
Strong revenue growth trend to continue
We expect sales to
grow at over 30%
CAGR over FY11-
13
The top line however is expected to grow at CAGR of 36% over FY’11-13 on
the support of more expansion expected in ATBS line from current 12000TPA
to 18000 TPA with the plant expected to run at full capacity by FY13.
IB plant in Lote will start utilising its full capacity by next year and Vinati’s
other products like DAAM will also start contributing to top line by next with
full capacity. Also new products like HP-MTBE, DEA and DIB also
contributing in FY13 substantially although major effect of this expansion will
be more visible in the years ahead. With all these future plans Vinati organics
is expected to cross sales of Rs 5.5bn by FY13 posting CAGR of 30% over
period of FY11-FY13.
All Figures in Rs mn
Product Performance
IB and DAAM will
also contribute to
revenues in FY12
and FY13
ATBS and IBB are the major products offerings from Vinati Organics which
constitute 54% and 33% of revenue to Vinati Organics respectively. IB and
DAAM product is also starting to make headway in Vinati with management
expecting to Rs 274mn contribution in FY12 from IB and Rs 160mn is
expected from DAAM in FY13. Whereas three new products are expected to
contribute around Rs 750mn in FY13 pushing revenues higher.
-
1,000
2,000
3,000
4,000
5,000
6,000
FY'09 FY'10 FY'11 FY'12E FY'13E
FY11-FY13 revenue growth
Company Report: Vinati Organics 27 Sep’11
Four-S Research 21
ATBS
ATBS segment grew at a 4-year CAGR of 79% to revenue of Rs 1.79bn in
FY’11, from Rs 174mn in FY’07. ATBS is also the most profitable segment
for Vinati Organics, so strong growth in this segment has helped Vinati to
improve its profitability.
Strong growth seen
in ATBS segment
A major 6000TPA capacity expansion for ATBS is expected to be completed
this year, taking the total capacity to 18000TPA. Vinati is expected to increase
ATBS production to full 18000 TPA capacities by FY13 to push up total
revenue from ATBS to around Rs 3.3bn in FY13.
-
200
400
600
800
1,000
1,200
1,400
FY'07 FY'08 FY'09 FY'10 FY'11
Revenue mix changing to higher margin products
IBB
ATBS
NA-ATBS
Other-products
All Figures in Rs mn
-
500
1,000
1,500
2,000
FY'07 FY'08 FY'09 FY'10 FY'11
ATBS revenue growth
All Figures in Rs mn
Company Report: Vinati Organics 27 Sep’11
Four-S Research 22
ATBS revenue
could cross Rs
3.3bn in FY13 from
Rs 2.1bn in FY11
IBB, a mature
product now, will
have a sedate
growth
IBB
IBB product line has shown the result of market stagnation with sedate growth
of 14% CAGR in last 4 years. IBB contributed Rs 1.07bn of revenue in FY11
to Vinati’s top line, from Rs 630mn in FY07. Due to stagnant nature of the
market, steady revenues are expected from IBB product line in the future. The
positive part is, Vinati is expected to maintain top position in the market.
Solid performance on margins with better future expected
EBITDA margin
hit 22% in FY11
Vinati has increased its EBITDA at an impressive CAGR of 70% from FY07
to FY11. This growth was achieved with focus on higher margins; EBITDA
margins touched 20% in FY11 from 10.5% in FY07. In absolute terms,
EBITDA crossed Rs 640mn figure in FY11 from Rs 86mn in FY07.
This growth in EBITDA margin is mainly due to increasing revenue
contribution from higher margin product line. Vinati has impressively pushed
up revenue contribution from ATBS product, a high margin product, from
mere 19% in FY07 to significant 55% in FY11. Post capacity expansion ATBS
contribution to revenue is expected to reach 58% by next year. Higher margins
are also attributed to improved operational efficiencies.
-
1,000
2,000
3,000
4,000
FY'09 FY'10 FY'11 FY'12E FY'13E
Boost in ATBS Revenue Expected
All Figures in Rs mn
-
500
1,000
1,500
FY'07 FY'08 FY'09 FY'10 FY'11
IBB Revenue
All Figures in Rs mn
Company Report: Vinati Organics 27 Sep’11
Four-S Research 23
Substantial
EBITDA growth
expected in near
future, while
maintaining solid
margins
Higher net profit with steady margin improvement
Vinati Organics’ net profit has grown at CAGR of 89% in last 4 years. Net
profit expanded from Rs 40.5mn in FY07 to Rs 520mn in FY11. Net margin
was around 16% in FY11 and has been above 10% for fourth consecutive years
now.
8.0%
13.0%
18.0%
23.0%
28.0%
0
100
200
300
400
500
600
700
FY'07 FY'08 FY'09 FY'10 FY'11
EBITDA
EBITDA
EBITDA margin
All Figures in Rs mn
15.0%
16.0%
17.0%
18.0%
19.0%
20.0%
21.0%
0
200
400
600
800
1,000
1,200
1,400
FY'11 FY'12E FY'13E
Strong EBITDA Growth Expected
EBITDA
EBITDA margin
All Figures in Rs mn
Company Report: Vinati Organics 27 Sep’11
Four-S Research 24
FY11 net profit at
over Rs 50 crore
gives Vinati a
strong base to
expand on
FY11-13 net profit growth
Company is expecting to expand its current net profit of Rs 520mn to Rs
757mn by FY’13. With current outlook Vinati Organics is expecting to
maintain margins in double digits also with support coming from ATBS and
other existing and new products with higher margins.
Net profit will grow strongly in FY13, lifting FY11-13 net profit growth to about 20% CAGR
Capex and Funding
Rs 1.3bn of capex in FY12 will finish current round of expansion.
Vinati has done capital expenditure of around Rs 200mn this year for de-
bottling of their existing Lote plant. Now Vinati will be looking for capital
expenditure of around Rs 800mn in FY12 which will be done for ATBS plant
capacity expansion as mentioned earlier along with TBA and DAAM capacity
expansion. In addition Vinati will be doing another Rs. 500mn capital
expenditure in FY12-13 for capacity setup for new products viz. DIB, DEA
and HP-MTBE.
3.0%
8.0%
13.0%
18.0%
23.0%
0
100
200
300
400
500
600
FY'07 FY'08 FY'09 FY'10 FY'11
PAT & Net Margin Growth
PAT
PAT margin
All Figures in Rs mn
0
100
200
300
400
500
600
700
800
FY'09 FY'10 FY'11 FY'12E FY'13E
Expected PAT growth
All Figures in Rs mn
Company Report: Vinati Organics 27 Sep’11
Four-S Research 25
Funded through IFC loan
Vinati does have the luxury of approved IFC loan of US$16mn in terms of
US$11mn ECB and US$5mn of FCCBs which are convertible into Company
Equity Shares at Rs. 100 per share. Vinati is looking to fund existing capex
plan with the mixture of its own reserves and debt funding.
Company Report: Vinati Organics 27 Sep’11
Four-S Research 26
Financial Annexure
Income Statement
Income Statement FY'07 FY'08 FY'09 FY'10 FY'11 FY'12 FY'13
Gross Sales 905 1614 2035 2384 3293 4394 6101
Less : Excise Duty 84 150 130 67 126 168 234
Revenue from Operations 820 1463 1905 2318 3167 4226 5867
Decrease/(Increase) in Stock 8 -18 29 -59 -12 -35 -46
Raw Materials Consumed 543 962 1190 1387 1844 2613 3561
Manufacturing/Other expenses 66 91 125 210 345 320 445 Payments to and provision for employees 53 66 88 115 149 206 287
Administrative & Other expenses 64 110 132 137 202 298 414
Total Expenses 734 1210 1565 1790 2527 3402 4660
EBITDA 86 253 340 527 640 823 1207
Depreciation 27 30 33 50 64 101 114
EBIT 59 224 307 478 575 723 1093
Other Income 22 40 53 84 97 133 185
Financial Expenses 20 33 41 44 47 107 128 Profit before tax and Exceptional Items 61 231 319 518 625 749 1151
Exceptional Items 0 0 0 0 0 0 0
Profit before tax 61 231 319 518 625 749 1151
Tax 20 79 68 118 105 219 394 Profit after tax before minority interest 41 152 251 400 520 530 757
Reported net profit 41 152 251 400 520 530 757
(All values in Rs mn)
Company Report: Vinati Organics 27 Sep’11
Four-S Research 27
Balance Sheet
Balance Sheet FY'07 FY'08 FY'09 FY'10 FY'11 FY'12E FY'13E
Shareholder's Equity
Share Capital 66 99 99 99 99 99 99
Reserves and Surplus 233 328 550 893 1338 1868 2626
ESOPs 0 0 0 0 0 0 0
Total equity capital 299 427 649 992 1437 1967 2724
Liabilities
Secured Loans 210 282 448 570 708 1408 1708
Unsecured Loans 47 61 61 61 61 61 61
Deferred Tax Liability 48 53 59 87 117 165 212
Total Liabilities and Owner's Equity 604 822 1217 1710 2324 3602 4706
0 0 0 0
Assets 0 0 0 0 0 0 0
Goodwill on consolidation 0 0 0 0 0 0 0
Gross Block 563 640 711 1109 1487 2487 2787
Less: Depreciation 203 232 264 313 375 472 586
Net Fixed Assets 360 408 447 796 1112 2014 2201
Work-in-progress 16 109 434 384 360 0 0
Investments 0 0 0 0 32 32 32
Inventory 82 121 121 189 350 297 413
Debtors 197 221 279 359 519 581 806
Cash and Bank Balance 9 14 19 18 19 726 1335
Other Current Assets 0 0 0 0 0 0 0
Loans and Advances 57 107 75 106 186 300 392
Total Current Assets 345 462 493 671 1075 1903 2946
Current Liabilities 104 129 117 98 173 232 322
Provision 13 29 40 43 81 115 151
Total Current Liabilities 117 158 157 141 254 347 472
Net Current Assets 228 305 336 530 820 1556 2474
Total Assets 604 822 1217 1710 2324 3602 4706
(All values in Rs mn)
Company Report: Vinati Organics 27 Sep’11
Four-S Research 28
Cash Flow Statement FY'07 FY'08 FY'09 FY'10 FY'11 FY'12E FY'13E
Net Profit/(Loss) before Tax 55 231 319 518 625 749 1,151
Depreciation 27 29 33 49 64 101 114
Interest paid 20 33 33 34 39 81 97 Unrealised Foreign Exchange (Gain)/Loss (net) 0 0 5 -17 -14 - -
Provisions for expenses and liabilities 0 0 15 20 31 - -
Excess Liability written back 0 0 0 0 -1 - -
Other Provisions and write offs (net) 0 0 -9 -9 -1 - -
Others charges and liability 2 -10 -1 -1 -27 - -
Operating Cash flow before Wcap 102 293 394 594 717 931 1,362
(Increase)/Decrease in Trade/Other Receivables -91 -73 -16 -102 -167 -61 -226
(Increase)/Decrease in Inventories -3 -39 1 -68 -161 53 -115
Increase(Decrease) in Trade/Other Payables 35 41 -26 -39 45 93 125
Cash Generated from Operations 43 221 352 385 434 1,016 1,146
Direct Taxes Paid -28 -98 -55 -97 -120 -225 -345
Operating Cash flow- A 16 123 297 288 313 791 801
0 1 - 0 0 0 0
Cash from Investing activities- B -68 -33 -396 -348 -385 -640 -300
Change in Borrowings 64 32 167 122 138 700 300 Adjustment for foreign exchange year end revaluation 0 0 -6 17 13 - -
Interest paid -12 -20 -33 -34 -39 -81 -97
Dividend paid 0 0 -25 -35 -34 -48 -70
Tax on dividend 0 0 -3 -7 -6 -16 -23
0 0 - 1 2 3 4
Cash from Financing activities- C 52 12 99 64 74 555 109
Change in Cash= A+B+C 9 -5 0 3 2 706 610
Opening Balance 5 14 -6 -6 18 19 726
Closing Balance 14 9 -6 18 19 726 1,335
(All values in Rs mn)
Cash Flow Statement
Company Report: Vinati Organics 27 Sep’11
Four-S Research 29
Ratios FY'07 FY'08 FY'09 FY'10 FY'11 FY'12 FY'13
Per share numbers (Rs)
EPS 0.7 3.1 5.1 8.1 10.5 10.7 15.3
DPS 1.2 2.0 2.5 1.0 1.3 1.3 1.9
Book Value 6.1 8.6 13.2 20.1 29.1 39.8 55.2
Profitability (%)
EBITDA margin 0.1 0.2 17.8 22.7 20.2 19.5 20.6
Pretax margin 0.1 0.2 16.7 22.3 19.7 17.7 19.6
Net margin 0.0 0.1 13.2 17.3 16.4 12.5 12.9
Return on avg. Equity 0.1 0.4 46.7 48.8 42.8 31.2 32.3
Return on avg. Capital employed 0.1 0.3 31.9 34.3 30 25.6 27.6
Growth Ratios (%)
Revenue growth 0.4 0.8 30.2 21.7 36.7 33.4 38.9
EBITDA growth 0.5 1.9 34.2 55.1 21.3 28.7 46.6
Net profit growth 1.0 2.8 37.8 62.4 29.8 2 42.8
Activity/Turnover Ratios
Asset turnover 1.7 2.5 2.2 1.8 1.7 1.6 1.6
Working Cap turnover 4.1 5.5 5.9 5.4 4.7 3.6 2.9
Debtor Days 73.3 52.1 47.9 50.2 50.6 47.5 43.1
Inventory Days 35.8 25.4 23.2 24.4 31.1 28 22.1
Payables Days 39.4 29.0 23.6 17 15.6 17.5 17.2
Liquidity Ratios
Current Ratio 3.0 2.9 3.1 4.8 4.2 5.5 6.2
Cash Ratio 0.2 0.1 0.1 0.1 0.1 0.1 2.1
Solvency
Debt Equity 0.9 0.8 0.8 0.6 0.5 0.7 0.6
Leverage Ratio 2.0 1.9 1.9 1.7 1.6 1.8 1.7
Net Debt / EBITDA 2.9 1.3 1.4 1.2 1.2 0.9 0.4
Interest Coverage 3.0 6.9 7.4 10.8 12.3 6.7 8.5
Valuation Ratios
P/E Ratio 5.7 4.7 2.8 8.8 6.4 6.3 4.4
EV/EBITDA 5.6 4.1 3.5 7.9 6.4 5.0 3.1
Dividend Yield (%) 3.4 2.8 3.5 1.4 1.9 1.9 2.7
Ratio Analysis
Company Report: Vinati Organics 27 Sep’11
Four-S Research 30
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Mumbai Office:
101,Nirman Kendra, Opposite Star TV,
Off Dr E Moses Road, Mahalaxmi,
Mumbai – 400001
Tel: +91-22-42153659