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Dolat Capital Report
Vinati Organics Ltd.'s Q2 FY25 revenue/Ebitda grew 20%/28% YoY and 5%/7% QoQ in-line with our estimates, while adjusted profit after tax (+46% YoY/ 23% QoQ) was above our estimate on higher other income.
Management maintained its FY25/26E revenue/Ebitda/PAT growth guidance at ~20%, targetting Ebitda margins of 26%-27%. New antioxidants to be launched in H2 FY25 are expected to report revenue between Rs2-2.5 billion for FY25. Additionally, ATBS expansion to 60,000 millon tonnes per annum is anticipated by late H2 FY25 (Feb-25) with revenue contribution expected from FY26.
Vinati Organics products are set to commission in ~6months; potential revenue is around Rs 5 billion.
Management's revenue guidance remains intact with ATBS expansion and antioxidants being the key growth drivers. However, delays in ATBS and Veeral Organics Pvt. Ltd. revenues along with lower-than-expected revenues from antioxidants remain key risks. Accordingly, we trim our EPS estimates for FY25/26 by 7%/5% and maintain a ‘Sell' rating with target price of Rs 1,630 (32 times Dec'26), as we roll forward.
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