Vinati Organics


(Subbu) #41

the stock has improved significantly from Rs 60+ to almost Rs 100 within a few months. I think that is a great performance in this depressing markets.


(Donald Francis) #42

Dear Subbu,

Thanks for flagging Vinati up - and its smart recovery in last 2-3 months.

a) Good to see significantly better operating performance in Q3

b) Interest costs are also significantly up

Will be interesting if it corrects back anytime.

Anyone tracking can update recent concalls from the company?

Thx

Donald

Vinati Organics Ltd

Quarter ended Year to
Date
Year ended
201112
(3)
201012
(3)
% Var 201112
(9)
201012
(9)
%Var 201103
(12)
201003
(12)
% Var
Sales 116.48 86.24 35.06 305.63 229.06 33.43 316.89 232.10 36.53
Other Income 0.15 0.18 -16.67 0.15 1.32 -88.64 1.59 2.78 -42.81
PBIDT 28.08 20.35 37.99 60.38 50.60 19.33 72.80 60.08 21.17
Interest 1.97 1.33 48.12 4.15 2.74 51.46 3.86 3.36 14.88
PBDT 26.11 19.02 37.28 56.23 47.86 17.49 68.94 56.72 21.54
Depreciation 1.81 1.85 -2.16 5.19 4.96 4.64 6.43 4.93 30.43
PBT 24.30 17.17 41.53 51.04 42.90 18.97 62.51 51.79 20.70
TAX 8.24 2.83 191.17 16.51 7.65 115.82 7.52 8.89 -15.41
PAT 16.06 14.34 11.99 34.53 35.25 -2.04 51.97 40.04 29.80
Equity 9.87 9.87 0.00 9.87 9.87 0.00 9.87 9.87 0.00

(Donald Francis) #43

Dear All,____

We are organizing a conference call to discuss the financial results of FYâ12 of Vinati Organics Limited on 16thMay, 2012 at 03.45 pm.____

Please find attached the Audited Financial Results for the year ended 31stMarch 2012.____

The call participants are:____

Ms. Vinati Saraf Mutreja â Executive Director____

Mr. N K Goyal â CFO____

The conference access numbers are:____

Single India Number: 1860 200 7888____

Local Access Number: 044 6688 0330____


Regards,____

Kaviraj Devaraj____

Manager â Corporate Finance____

Vinati Organics, Mumbai, India

(Donald Francis) #44

Following data on product mix - from an earlier Investor Presentation

Vinati



Segments FY12 FY11 FY10 FY09
Na-ATBS
65.22 40.66 39.09


20.59% 17.05% 19.21%
ATBS
110.4 57.32 33.97


34.86% 24.04% 16.70%
IBB
101.81 120.66 118.78


32.15% 50.61% 58.38%
Others
39.26 19.79 11.62


12.40% 8.30% 5.71%


316.69 238.43 203.47

We will get the figures in Thursday Concall, but anyone has an update on current stats?? May help to question properly

Cheers

Donald


(TCX) #45

I found the Q3 Concall details, as below. Will be good if someone can post the Q4 Concall details.

tcx

Conference Call
Vinati Organics
Expects Capex of Rs 70 crore for FY’13

Vinati Organics announced the results for the quarter ended December 2011 and held a conference call on 03rd February 2011 to discuss the results and its future growth strategies. The Key takeaways of the call are as follows.

Financial Information:

Net sales grew by robust 35% to Rs 116.48 crore for the quarter ended December 2011.

Also, OPM expanded by 190 bps YoY to 24.9% leading to strong 46% growth in operating profit to Rs 29.40 crore. Consequent to the 48% rise in interest cost coupled with the marginal 2% decline in the depreciation to Rs 1.81 crore there was 51% growth in PBT before forex gain to Rs 25.77 crore. Adjusting for forex loss Rs 1.46 crore compared to forex gain Rs 0.09 crore in the corresponding previous period there was 42% growth in PBT to Rs 24.31 crore. However, the steep rise in effective tax rate by 1740 bps to 33.9% curtailed growth in net profit to 12% YoY to Rs 16.06 crore.

Highlights of the Call:
The ATBS sales were at 2700 MT in Q3’FY 12 compared 3000 MT in Q3’FY11. The fall in sales was on the back of shutdown of plant for 10 days during the quarter.

Further, the realization was at Rs 180 per kg for the same period. However, it indicated that has resolved the issue and going forward expects the normal growth in business.

The IBB sales were at 3900 MT in Q3’FY 12 compared to 2900 MT in Q3’FY11. The realizations were at Rs 120 per kg compared to Rs 89 per kg in the corresponding previous period.

The IB sales were at 1000 tonnes for the quarter ended December 2011. The realizations were at Rs 100 per kg compared to Rs 85 per kg in the corresponding previous period.

The robust growth in sales during the quarter is on the back of increased contribution from the IBB and improved realizations from all the three products.

It indicated that the demand continues to be robust for the ATBS and IBB going forward.

The EBITA margins from the ATBS were at 25% in Q3’FY 12 compared 23-24% in the Q3’FY 11. Also, for IBB margins were at 20% during the quarter compared to 14-15% in the corresponding previous period. Further, the Margins for the IB were at 20% in Q3’FY 12 and at similar levels in the corresponding previous period.

The Di Acetone Acrylamide (DAAM) capacity of 1000 MT expected to be completed by April 2012. Also, the expansion of TBA capacity of 1000 MT expected to be completed by June 2012.

The PAP project which was to be started during the quarter is further delayed.

The Company plans to fund the expansions scheduled going forward through debt and internal accruals. The debt is at Rs 160 crore as on 31st December 2011.

The Capex expected to be Rs 60 crore for FY12. Further, The Capex would be Rs 70 crore for the FY’13 and expected to raise Rs 40-45 crore through the Debt.

The Company expects revenues of Rs 400 crore in FY’12 and 600 crore in FY’13 with similar margins.

Further, it expects revenues to be Rs 1000 crore by the FY’15.


(Hemant V Bhatia) #46
Q 4 Conference Call
Vinati Organics
Expects ATBS sales of 15000-17000 MT for FY'13
Vinati Organics announced the results for the quarter and year ended March 2012 and held a conference call on 16thMay 2012 to discuss the results and future growth strategies. The key takeaways of the call are as follows

Highlights of the call:

  • Net sales grew by sharp 55% YoY to Rs 136.47 crore for the quarter ended March 2012 and net profit grew by 21% to Rs 20.27 crore.
  • Net sales grew by robust 40% YoY to Rs 442.11 crore for the year ended March 2012 and net profit grew by 6% to Rs 54.81 crore.
  • The ATBS sales grew by 27% to 3800 MT for the quarter ended March 2012. EBITDA margins were at 25% and the realizations were at Rs 170 per kg.
  • The IBB sales grew by sharp 52% to 3800 MT in Q4'FY12. EBITDA margins were at 15% and realizations were at Rs 115 per kg.
  • The IB sales grew by 54% to 1000 MT for the quarter ended March 2012. The EBITDA margins were at 20% and realizations were at Rs 100-105 per kg.
  • The Company had current ATBS capacity of 13000-15000 MT and expected to increase to 26000 MT by the September 2012.
Sales of Key products
Q'4 FY12 Q4'FY 11 Var (%) FY'12 FY'11 Var (%)
ATBS 3800 3000 27 12500 11000 14
IBB 3800 2500 52 13500 11000 23
IB 1000 650 54 3300 1500 120
Above figures are in million tones
Source: Capitaline databases
  • The Di Acetone Acrylamide (DAAM) capacity of 1000 MT earlier scheduled to be completed by April 2012 and now expected to complete by June 2012. Also, the TBA capacity of 1000 MT expected to be completed by September 2012.
  • The PAP project trials were stopped due to the deviated results and expected to be restarted in the next three months.
  • The Demand outlook for the all the products ATBS, IBB, IB is good. The ATBS market expected to grow by 15-20% for the next year.
  • The sales target for the ATBS expected to be 15000-17000 MT for the FY'13. Also, the IB sales expected to be 4000-5000 MT. However, the IBB sales expected to be at same levels of 13000 -13500 MT.
  • The Company maintains earlier revenues guidance of Rs 600 crore by the FY'13 and Rs 1000 crore by the FY'15.
  • The Debt is at Rs 110 crore as on 31stMarch 2012.
  • Capex expected to be Rs 50-60 crore for the FY'13.

(TCX) #47

Thanks a lot Hemant.

For the purpose of comparison with FY12 Q4 Concall, I found the details of FY11 Concall. Good to see the company is maintaining its guidance, and is upping the stake in ATBS. Thought this will be useful for all.
http://www.derivatives.capitaline.com/newsdetails.aspx?sno=479671&opt=HP&secid=3&subsecid=110&SelDt=
Analyst Meet / AGM 25-May-11 null
Conference Call
Vinati Organics
The company expects revenues to reach Rs 600 crore by FY'13 and Rs 1000 crore by FY'15

Vinati Organics declared the financial results for the quarter ended and year ended March 2011 and conducted conference call on 24thMay 2011, to discuss the same and its future growth strategies. Vinati Saraf Mutreja âExecutive Director and NK Goyal, Senior, CFO addressed the call

Financial Information:

Vinati Organics reported 44% growth in net profit to Rs 16.72 crore for the quarter ended March 2011, primarily on account of 41% growth in net sales to Rs 87.83 crore. Operating profit margins remained almost flat at 24.1% resulting operating profit to grow by 45% to Rs 22.12 crore. With increase in interest cost by 64% to Rs 1.11 crore and depreciation by 15% to Rs 1.46 crore, PBT before forex gain was up by 47% to Rs 19.54 crore. After accounting forex gain of Rs 0.06 crore compared to Rs 0.75 crore in corresponding previous period, PBT after forex gain was up by 40% to Rs 19.61 crore. Further, decrease in tax rate by 340 basis points to 14.8% resulted net profit to increase by 44% to Rs 16.72 crore.

Highlights of the Call are:

  • Total sales grew by 44% to Rs 91.62 crore for the quarter ended March 2011, on the back of increased contribution from 2-Acrylamido-2-Methyl Propane Sulfonic Acid (ATBS) capacity.
  • Net sales from ATBS surged by 79% to Rs 175.6 crore for the year ended March 2011. Further, ATBS production capacity also increased from 10000 MT to 12000 MT by plant de-bottlenecking. Interestingly, ATBS contributes more than 55% of net sales in FY'11.
  • The Isobutylene (IB) production will be majorly used for captive use and rest will be sold in market. The setup of 12000 MT plant of IB as backward integration for ATBS at Lote.
  • The Company total production capacity was 24000 MT in 2010 and increased to 38,500 MT in 2011. Further, it's planning to expand total production capacity to 46,000 MT by FY 2012 with increasing high margin product capacity (Focus on ATBS).
  • The total production capacity of 38500 MT for the year ended March 2011, includes ATBS â12000 MT, IBB - 14000 MT, IB â12,000 MT and TBA 500 MT.
  • Revenue share of high margin products ATBS & Na-ATBS increased from 36% in FY'09 to 55% in FY'11. Further, IBB revenue share declining from 58% in FY'09 to 32% in FY'11.
  • The management feels that ATBS has robust demand in the market and expects demand to improve further. In addition, ATBS capacities are running with almost 100% capacity utilization levels.
  • It expects ATBS capacity to increase 15000 MT by the September 2011 and 18000 MT by December 2011.
  • It expects the revenues contribution from ATBS expected to improve to 55-60% for the FY'12 and going forward its share will increase to 65-70%. Further, IBB expected to contribute 30% to the revenues and the remaining revenues expected to come from the Bi-products and monomers.
  • Its top 5 customers are the MNC's, which are into manufacturing chemicals and contributes40-50% to the revenues.
  • The tax rate expected to be around 30% (effective tax rate 32%) for the FY'12. The increase in ATBS share expected to counter rise in the tax rate for the FY'12, as it was high margin business. The capex expected to be Rs 80 crore for the FY'12.
  • The company expects revenues to grow 30% for the FY'12. Further, It expects revenues to reach Rs 600 crore by FY'13 and Rs 1000 crore by FY'15.

(Donald Francis) #48

Thanks Hemant & TCX. Most of the points from concall are covered in the summaries.

Some notes/observations, we should think about:

Vinati FY12 Realisation Sales FY13E

(MT) Rs/Kg (Cr) (MT)
IBB 13500 115 155.25 13000-13500





ATBS 12500 170 212.5 15000-17000





IB 3300 100 33 4000-5000



400.75

1. Price realisation had an upward bias because of the rupee depreciation effect (mentioned by Management)

2. As a counterpoint, RM costs had also gone up (most of it is imported). management maintains it is mostly volume growth that has resulted in higher sales

3. Q4 EBITDA margins were at a high 26%. Q2 EBITDA was at 15%. RM/Sales in both Q2 and Q4 are at ~63%. Perhaps RM prices get revised on a monthly basis, while for most products RM prices would get revised with a quarterly lag. IBB prices gets revised on a monthly basis, Management clarified. Management maintained EBITDA sustainability at 20%

I would like to understand this picture clearer and the sustainability of margins at these levels -in either case - rupee appreciation or depreciation!

4. If fY13 Sales targets of 600 Cr can be achieved with EBITDA of 20%, and a net margin of 12-13%, we are talking of 72 Cr in Net Profits, or EPS of Rs 15-18 which is a very reasonable valuation ~5-6x (at CMP)

So far Management is seen to be walking the talk, and going aggressive on ATBS expansion, the highest margin product which will probably contribute more than 60% of business (currently 55%).

Will be good to probe Management on sustainability aspects. Lets try for another Management Q&A update in June.

Please send in your observations/queries for understanding the story better.


(Subbu) #49

Thanks Donald, TCX and Hemant.

One of my queries is on the delay of new projects DAAM and TBA. I believe these are high margin products which should increase profitability. The results look good but I share Donald’s concern i.e. are these margins sustainable. They could be one time effects due to rupee depreciation. Overall I still think its a buy but would like to see more clarity on when new projects will be completed. Maybe the stock will get re-rated after that.

Subbu


(Donald Francis) #50

Hi Subbu,

The new projects DAAM, TBA volumes are pretty low. So I am not too concerned there. We should track ATBS expansion. These guys are going pretty aggressive on that.

Any idea how we can independently establish demand for ATBS, IBB and IB - the 3 main products. Any journals, paid sites, etc.

Rgds

Donald


(Donald Francis) #51

Hi Guys,

Meeting with Vinati organics Senior Management coming up next week - still tentative.

Please fire away your questions and help us make the most of the opportunity.

Rgds

Donald


(Subbu) #52

Major issues are around the new capacities being planned and when they will start to materialise. Have they found customers for their products.

Second is regarding margin sustainability. What sort of margins are management targeting both for FY13 and on a long-term basis?

Has the recent slowdown in the global economy reduced demand for their end products?

How is management planning for capacity additions by competitors? Which areas does management see the most competition.

What are the products for the future i.e. the products that will drive revenue in FY15 - FY16?

cheers,

Subbu


(Donald Francis) #53

Guys,

Quick Update on Vinati, after a short but comprehensive session with MD Mr Saraf.

Vinati’s business is good, but not risk free. It will always need to manage challenges, which are somewhat dynamic, and also a little seasonal in nature.

Overall, good visibility going forward. I will prefer to pick up only at lower levels, since in my opinion for the kind of business it is in, we need a higher margin of safety.

Please wait for the Management Q&A to be updated. May take upto 2 weeks, as we move onto Delhi next week. Other companies covered BKT - is in a sweet spot. Check thread for details. Ajanta Pharma - Management Q&A finished this evening - still to sink in. The business seems solid and set for a 25% cagr busines performance, never mind the froth in recent times.

Rgds

Donald


(Hemant V Bhatia) #54

Dear Donald,

If possible,please update the Mgt Q & A.

Thanks.


(bagdu) #55

Vinati has been putting up conf call transcript on its website since last 2 quarters. Check out: http://www.vinatiorganics.com/press_releases.html


(Hemant V Bhatia) #56

The company held its conference call on 30thOct’13 and was addressed by Vinati Mutreja Executive Director

Key highlights by Capital Market

Of the total sales of the company as on Sep’13, about 60% come from ATBS and related products and rest come from IBB and related products. Vinati Organics is the largest manufacturer of IBB in the world with over 60% market share.

The company is also the largest producer of ATBS. ATBS is a specialty monomer. Company has a market share of about 45% and the rest market is dominated by a Japanese and a US company. About 30-35% of total sale for ATBS would be to oil and gas industry, in which management expects a multifold growth to happen. As per management, demand for ATBS worldwide is expected to remain strong due to development of enhanced oil recovery polymers.

ATBS is predominately used in oil & gas industry, paints, cosmetics, water treatment, textiles, personal care, paper, mining etc. Current capacity of ATBS stands at about 26000 MT, and the company utilized capacity to the tune of about 17000 in Sep’13 quarter.

IBB is predominately used in Pharmaceutical industry and in Perfume and is also used as a specialty solvent in various other industries. Its intermediaries and by some value addition it can also be used in paints and coatings, agrochemical and pesticides industry, FMCG industry, solvent extracts, LCD, tyre, gasoline etc.

AAM, Polymers and HPMTBE Plant have already been commissioned. ATBS expansion & TBA projects are nearing completion. The company has 5000 MT of HPMTBE capacity and capacity utilization as on Sep’13 stood at 50%. TBA capacity stood at 750 MT and 35% is the utilization capacity. Diacetone acryl amide (DAAM) is yet not started as trial production is still going on. DAAM has installed capacity of about 1000 MT.

There are no major capex lined up except some extension existing ones. At the most capex will be around Rs 100 crore in next couple of years.

Management earlier planned to set up a co gen power plant at cost of about Rs 50 crore, but Maharashtra government has allowed the exchange of power trading activities, which ensures lower power costs and hence for the time being, the company has postponed its expansion in power plant.

Within exports demand from EU and US markets continue to remain strong.

Management expects similar margins of about 21-22% going forward, because of all the new value added products.

There is a forex loss of about Rs 2.50 crore as compared to forex gain of about Rs 7.50 crore for Sep’12 quarter.

Overall management expects the company to be about an Rs 1000 crore company in next couple of years.


(Vipul Goyal) #57

Guys,

Could use your expert opinion on the FCCB issue with the company.

As mentioned in the thread, Vinati borrowed 16 mil USD in the form of FCCB a couple of years back. In the foot-notes of the latest Annual Report, it is said that these FCCBs have the option of converting into stocks at Rs. 100 each, which using 60 Rs per USD translates to around 1 cr shares, as compared to the current 4.94 crore - representing a dilution of around 20%. Furthermore, the lenders earn only 4% if they hold it till maturity. With the current price at 175, is there a huge risk of dilution? Wouldnt the lenders exercise their option and covert their bonds to stock?

Secondly, even though the sales are increasing by 33% (in the past 2 quarters), the PAT is increasing by a mere 1-2%. What is the use of such growth.?

There is so much good about this company, but the couple of points has really scared me off. What do you guys think?


(Nikhil Moryani) #58

A cursory look at Vinati Oranics gives a very interesting picture of a co. into specialty chemicals. The co. started out with 2 products and has grown its product portfolio to 12-14 products having common raw-materials or common processes or by-products being used as a base for forming another product. The result is a unique portfolio of products giving cost advantage which could be matched by a competitor only if entire range of activities are replicated.

Anyone tracking/invested in the co.,please give your views.


(Hemant V Bhatia) #59
Call addressed by Vinati Mutreja Executive DirectorKey highlights by Capital Mkt;

Of the total 27% net sales growth for FY'14, about 60-65% was volume growth and the rest was value growth. Sales of ATBS grew by 30% YoY, Isobutene was up by 50%, IBB was up by 20%.

The company is the largest producer of ATBS. ATBS is a specialty monomer. Company has a market share of about 45% and the rest market is dominated by a Japanese and a US company. About 30-35% of total sale for ATBS would be to oil and gas industry, in which management expects a multifold growth to happen. As per management, demand for ATBS worldwide is expected to remain strong due to development of enhanced oil recovery polymers.

ATBS is predominately used in oil & gas industry, paints, cosmetics, water treatment, textiles, personal care, paper, mining etc.

Capex for next 18 months is expected to be about Rs 150 crore of which about Rs 100 crore will be spent on de bottlenecking of existing facility and on new products which are derivatives of the existing product and rest will be on cogeneration power plant. The capex of about Rs 100 crore has a potential to generate additional revenue of about Rs 200 crore in next 3 years.

The entire capex will be funded through internal accruals.

For FY'15, management expects the company to register net sales growth of 20% YoY with stable margin at operating level.


(Shan) #60

They just published the june quarter numbers and they’re looking good.http://www.bseindia.com/corporates/anndet_new.aspx?newsid=427c65b9-4f6d-4f37-afc7-071bfbed3ed6