VINATI ORGANICS LIMITED Concall Summary Date: 17 May 2024
FINANCIAL HIGHLIGHTS
During the quarter, the National Company Law Tribunal (NCLT) sanctioned the scheme of
amalgamation with Veeral Additives Private Limited (VAPL) into Vinati Organics with effect from 1st April 2021 and accordingly the comparative financial result and other financial information for the quarter, year till date, and year ending March 2023 has been restated taking into account the full effect of the merger.On a QoQ basis, the revenue from operations grew by 23% and net profit grew by 30% QoQ to ₹104 crore.
In FY24, the EBITDA declined by 18% YoY to ₹509 crore as compared to ₹620 crore in FY23.
BUSINESS HIGHLIGHTS
On a QoQ basis, the company witnessed volume recovery in ATBS (2-Acrylamido 2-Methylapropane Sulphonic Acid) and butyl phenols. The ATBS sales are now normalized and de-stocking is over.
In FY24, the revenue contribution from ATBS was ~32%. The sales were down compared to last
year.The company’s global market share in ATBS remained unchanged at 60%-65%.
In FY24, the revenue from butyl phenols business was ~₹300 crore. The company witnessed good growth in this business and it was a major contributor to the revenue during the year.
During the year, the capacity utilization of butyl phenols was ~65%-70%.
The performance of Iso Butyl Benzene, Iso Butylen, and other customized products remained flattish YoY.
Over the last four years, the basket of customized products doubled in revenue to ~₹150 crore. The company expects good growth in the coming years as well.
In FY24, the revenue from the antioxidants (AO) business was ~₹130 crore. The demand for antioxidants is still going through a weak period. The company anticipates scaling up of antioxidants sales in FY25.
During the year, the capacity utilization of antioxidants was ~25%. The company expects to touch a 50% utilization level this year.
The research and development (R&D) department is also working on adding more antioxidants to its product portfolio and the long-term outlook of antioxidants remained positive.
In FY24, the company incurred capital expenditure of ~₹360 crore. Some part of the capital expenditure was incurred towards Vinati Organics for capacity expansion & addition of some new products and the balance was constituted for its subsidiary company Veeral Organics Private Limited (VOPL).
Veeral Organics Private Limited (VOPL) is a 100% owned subsidiary of Vinati Organics Limited for manufacturing niche specialty chemicals. The total capital expenditure in VOPL will be ~₹500 crores mainly consisting of anisole, MEHQ (Monomethyl ether of hydroquinone), Guaiacol, 4-Methoxyethyl phenol, and a couple of Iso Amylene derivatives. These products are used in polymerization inhibitors, flavors & fragrances, pharmaceuticals, and personal care. The asset turnover would be ~1x.
One plant of MEHQ (Monomethyl ether of hydroquinone) and Guaiacol was commissioned in March 2024. The company is still working on getting its product tested and sampled with customers. It is also working on enhancing the yield and efficiency of the plant.
The other products, i.e., anisole, 4-methoxyethyl phenol, and two more products to be commissioned in H2 FY25.
The ATBS capacity expansion from 40,000 to 60,000 metric tons per annum is proceeding well. It is expected to be completed in H2 FY25.
As of date, the company commissioned a total of ~33 megawatts of solar power plant. This will help in reducing the energy dependence on non-renewable sources.
FUTURE OUTLOOK
The company expects revenue growth of ~20% CAGR over the next 3 years mainly driven by the new products and some of its existing products.
The management anticipates an EBITDA margin of ~26% on a sustainable basis.
For FY25, the company plans to incur capital expenditure of ₹550 crore including the subsidiary.
The management anticipates the demand for ATBS to remain strong and expects double-digit sales growth in the next financial year.
In antioxidants business, the company expects sales of ~₹280-₹300 crore in FY25. Antioxidants business is expected to be a growth driver for the company. The peak revenue potential of the antioxidants business is ~₹700 crore.
In Veeral Organics Private Limited, the company expects sales of ~₹50 crore in FY25. It expects some sales from its recently commissioned MEHQ and Guaiacol plant.
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