Vinati Organics


(Vivek Mashrani, CFA) #81

Vinati organics reported its quarterly result today…

http://www.bseindia.com/xml-data/corpfiling/AttachLive/E4557B08_C911_4352_B998_7949C54DBE22_144312.pdf

Overall, flat quarter on Q-o-Q basis and muted growth I believe.

Disclosure: Invested


(JatinK) #82

Good improvement in Balance sheet.
Debt reduced, current investments have improved a lot.

Good jump in Capital WIP also.


(amolk) #83

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.


(Vivek Mashrani, CFA) #84

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).


(amolk) #85

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


(Vivek Mashrani, CFA) #86

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.


(Gagandeep Singh Nanda) #87

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.


(Gagandeep Singh Nanda) #88

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


(Vivek Mashrani, CFA) #89

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: [email protected]

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


(atishay1) #90

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


(Mukesh Verma) #91

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

Source: BSE website


(Karthik) #92

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


(Gagandeep Singh Nanda) #93

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


(Vivek Mashrani, CFA) #94

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.


(Gagandeep Singh Nanda) #95

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


(Vivek Mashrani, CFA) #97

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


(Gagandeep Singh Nanda) #98

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.


(Vivek Mashrani, CFA) #99

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!!


#101

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(Vivek Mashrani, CFA) #102

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