Accumulate Vinati Organics Ltd For Target Rs.1,475 by Prabhudas Liladhar Capital Ltd
ATBS expansion to drive growth in FY27
VO reported revenue of Rs6bn in Q4FY26, up 14% QoQ but down 7% YoY. Sequential topline growth was supported by volume growth as well as gains from INR depreciation. EBITDA margin contracted by 130bps QoQ due to higher raw material costs; however, the company expects the increase in input costs to be passed on to customers going forward. The management has guided that they expect sustainable EBITDAM of 26%–27%. The antioxidants segment saw 25% volume growth and contributed 12%–14% to overall revenue and has a peak revenue potential of Rs7bn. Revenue contribution from new products such as MEHQ and guaiacol is yet to commence as the plants remain in the stabilization phase, which may take a few more months. We expect contribution from these products starting H2FY27, followed by a gradual ramp-up thereafter
Additionally, plants for upcoming products such as 4MAP, TAA, and PTAP are expected to be operationalized in FY27, providing further medium-term growth visibility. The stock is currently trading at 26x FY28E EPS. We value the company at 30x FY28E EPS and maintain our ‘Accumulate’ rating with a target price of Rs1,475.
Revenue increased by 14% QoQ:
Consolidated revenue stood at Rs6bn (-6.9% YoY but increased 13.8% QoQ) (PLe: Rs5.3bn; Consensus: Rs5.6bn). The actual topline was 14.5% higher than our estimates. FY26 revenue was 1% lower than FY25., due to lower ATBS volumes. Gross profit margin was 53% (vs 47% in Q4FY25 and 55% in Q3FY26), improved YoY to 510bps due to decrease in overall raw material cost.
FY26 EBITDA increased by 13%:
EBITDA stood at Rs1.7bn, decreased 6% YoY but increased 9% QoQ (PLe: Rs1,498 mn). EBITDAM stood at 28.2% (PLe:28.4%) as against a margin of 27.8% in Q4FY25 and of 29.5% in Q3FY26. For FY26, EBITDA increased 13% compared to FY25. Reported PAT was at Rs1,239mn (0.7% YoY/ 22.8% QoQ), while margins were at 21% vs 19% in Q4FY25 and Q3FY26 respectively.
Additional insights:
(1) Increasing raw material prices resulted in sequential contraction in margin during Q4.
(2) No contribution from Veeral Organics during the quarter.
(3) The plants of Veeral Organics are expected to take few more months to stabilize.
(4) Phase I of ATBS capacity expansion (10,000mtpa) will be ramped up gradually and is expected to reach full utilization in the next 2 years.
(5) Revenue growth remained flat due to weak ATBS demand, volumes were down 5%-10%.
(6) ATBS Demand-side slowdown was seen in October, while recovery/pick-up started from April.
(7) For FY27, the company expects strong growth driven by ATBS capacity expansion.
(8) Management is guiding for 20% volume growth in ATBS and ~15% growth in antioxidants.
(9) Overall, management expects ~15% vol growth with sustainable EBITDA margins of ~26–27%.
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SEBI Registration No. INH000000271Accumulate Paradeep Phosphates Ltd For Target Rs.141 by Prabhudas Liladhar Capital Ltd
