Vinati Organics

revenue declined from 192 cr to 143 cr quarter over quarter. I had called company secretary last month (when revenue declined in the last qtr). As per him it is because of drop in the crude oil prices. It seems to be believable as company is able to pass the price benefit by keeping its margin intact (in fact it gone up a little bit).

So with the sharp decline in oil prices, don’t think revenue are comparable. Will need to check if volume have gone up.

I am little concern about Vinati & Mohit Mutreja (husband wife) with different interest. Mohit has founded a company mainly into trading activity. Obviously, Mohit would focus more energy on his company…I hope it should not result into any conflict.

Yes, you are correct in that. They have fixed realizations per litre of chemicals they sell. The contract protects them from forex fluctuation and crude price/raw material price impact. Infact, if you think about it the margins will slightly expand when crude price go down and vice versa (which is exactly what has happened in last few quarters).

See Pg. 7 of this note to verify about the contract terms >> http://www.hdfcsec.com/Research/ResearchDetails.aspx?report_id=3008142

Only problem is disclosure. It is difficult to determine if the volume has gone up or down since they don’t keep concalls since last 1 year, nor they release any presentation. Only annual report will clarify that hopefully.

On board point, I think this happens with all the companies. Board members are generally from other firms and sometimes totally different industry (Eg. Mr. KV Kamath from ICICI was board member of Infosys). And such closely held companies tend to nominate board members from their family members (which is not so positive but can’t avoid with such firms).

Why Vinati has stopped the investor conference calls? Does this indicates lack of passion? Just a thought

Agree, thats a concern. A 2,000 Cr MCap company that stopped doing conference calls. Though not sure about the reason. Had asked the same to company secretary sometime back but did not get straight answer to this.

Good to see some activity on this thread. Have been holding Vinati for ~1.5 years now, very little research material available - no con calls, analyst reports are tough to find.

Though the company has been reporting good bottom-line numbers since last few quarters, price has been going down for last 6-8 months. Went through the Annual report, didn’t find any negative.

Top line has been coming down due to RM price pass through but it will be good to see the volume trend if we can get it disclosed by reaching the Investor Relations desk of Vinati.

Disclosure: Holding ~10% of portfolio for ~1.5 years.

Vivek - do you have the company secretary’s contact details? Would be good to check the volume trend and future outlook from him/her.

Please find below the contact details:

Name: G.S. Singhi
Designation: CS cum Finance Controller

Desk phone: 022-61240402
Mobile: 9869045212
Fax: 022-61240438

E-mail: gssinghi@vinatiorganics.com

Please share details of discussion if you find something interesting. Thanks.

Everything looks great about the company however I believe people are getting scared due to ageing Mr. Saraf and new management being able to step up and deliver on the promises.

Especially with a large capex around the corner, not sure how the performance would continue from hereon. Also they have stopped doing concalls etc which is another concerning area if they are hesitant about something.

Discl: Tracking position

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Management bought 31000 shares of the company between June’15 & September 2015 quarter.

Source: BSE website

Does this warrant a buy around 380? Is there any reason why it has fallen from 600 level?

It has fallen because they’ve had to pass on RM (crude oil) price decrease to customers thus leading to drop in realizations. I don’t think volumes have got affected (though haven’t checked this) and margins and PAT have both expanded. Seems to be attractively priced at these levels (has fallen from a ttm PE of ~23 type to ~15).

Disc: Invested

According to BNP Paribas and Equirus reports released recently, there have been fall in volume as well in ATBS and in IB.

In ATBS, the volume fall is due to lower crude prices affecting demand of Enhanced oil recovery (EoR) while in IB they have lost one of the large client. BNP says the reason is that the client has switched to another alternative product (which is a concern). Logically EPS of 3Q will reflect the impact due to loss of this client.

The concern further is that if one client is able to find substitute of IB, will other clients also follow suit or it was just one-off case depending upon the nature of industry of the client (particularly when they are adding capacity for IB). Another concern is there is no disclosure in this direction from company.

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Vivek - can you pls share the reports you’re referring to? Not able to find them on researchbytes or any other forum.

Facing some problem attaching. Will share as soon as possible.

No problems. I’ve also just written a mail to the Company Secretary, Mr. Singhi regarding volume information amongst other things. Will also call him up incase I don’t get a reply in 2-3 days.

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Great. Please ask him about the client loss and exact reason for the same. If possible, also inquire about % loss in IB volume due to this. Cheers!!

Please do not upload reports on VP that are not freely available in public domain. Geojit BNP report post has been deleted. What you do privately or on emails is not our concern, but how you conduct yourself on VP is!

Please see VP guidelines on respecting intellectual property. By uploading reports (on VP Forum) that are not for free circulation, you are violating the authors intellectual property and the rights associated with the document.

Please do not solicit such reports on the forum either. That is also violating VP guidelines.

And when a report is publicly available, it is better to provide a link to the document from the original author/site rather than upload at VP

Thank you for co-operating.

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Thanks for information. Will take care of this going forward. Cheers!!

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Company has released a press release today (as per below) indicating that it will buy 9 lakh shares through Suchir chemicals pvt ltd (promoter entity) within next 1 year for price below 500 (subject to cooling period of next 6 months).

http://www.nseindia.com/corporate/Letter_to_NSE_071215_07122015142811_098.zip

As per calculation this amounts roughly to 1.7% stake, which means the promotor ownership may increase from ~72.2% to ~73.9%

but this doesnt means that promoter has to necessarily buy 9 lac share if share is below 500. they may choose not to buy at all while mkt may just get excited and buy stock. is there any regulatory compulsion for promoter to buy this qty, if price is below 500?