Vinati organics…
looks like distribution after 5 waves complete… now in wave 4 correction before the last motive wave up happens within the cycle…
whats exciting is , next couple of year, important new capacities are coming online …
1.Para Amino Phenol [paracetamol intermediate]
The total demand in India is fully met through imports (30,000 TPA).this is an import substitution opportunity[import source is china].interesting this is there is possibility of a cost leadership in manufacturing PAP due to its novel manufacturing process which is more efficient than the chinese . china is both the largest manufacturer and consumer of PAP, with a capacity of more than 1,10,000TPA, domestic demand being 49,000TPA only.the company has planned to manufacture PAP using catalytic hydrogenation of Nitrobenzene,[using platinum or palladium as a catalyst] a single step process with only ammonia as a byproduct . this catalytic hydrogenation method is not only more environment friendly but also cost
efficient giving it an edge over Chinese competitors…
here is a overview why the chemical process mentioned has advantages over traditional methods…
pap.pdf (360.8 KB)
88% of PAP is used worldwide to manufacture Paracetamol , 7% is used as a rubber antioxidant and 5% is used in dyes.
the planned capacity is 30,000TPA.
FY18 Sales/gross Block are at Rs 7.43bn/ Rs 6.05bn.
PAP project is expected generate sales of Rs 7.0bn (~95% of FY18
Sales)
RM- Toluene and propylene and catalyst[reusable]
2.Butyl phenols…
Vinati Organics plans to introduce 4 products -Para-Tertiary Butyl
Phenol (PTBP) , Ortho-Tertiary Butyl Phenol (OTBP) , 2,4-Di Tertiary Butyl Phenol (2,4-DTBP)
and 2,6-Di Tertiary Butyl Phenol (2,6-DTBP)
In India, currently, there are no manufacturers for butyl phenols.
Another import substitution opportunity
capacity planned- 39, 000MTPA
capex= Rs 1.5bn
expected revenue potential = Rs 2.0bn.
The project is expected to commission in fy20
RM-Benzene, nitric acid
3.The ibuprofen play
BASF, USA has planned a big expansion of Ibuprofen capacity and is expected
to put up an Ibuprofen capacity with a capex of EUR 200 mn.
BASF currently is a key customer of Vinati Organics to whcih is supplies the intermediate Iso Butyl Benzene…in addition Rs.1bn capex is in plans to forward integrate Iso Butyl Acetophenon [IBAP] production capacity which is another uptream intermediate of ibuprofen and is a value addition in the business, which might take more demand traction from the ibuprofen producing customers… IBAP startup is still not clear in term of time line but an estimate of Rs.1 to 1.5bn addition to tjhe operating topline is expected from this project…
4. ATBS play
2-Acrylamido-2-Methylpropane Sulfonic Acid which is almost half of the topline driver for the company and in which the company has 45% global share of the market, an interesting development has occurred with exit of another player, lubrizol which used to own 25 percent of the market share.
Meanwhile the capacity is being incremented by VO from 2500MTPA to 40,000MTPA with debottlenecking plus expansion…
timeline for the entire capex amount of Rs.8bn is to be completed by fy21 and then come online…
for now the wave 3 of the cycle is complete on the charts and presently wyckoff distribtion seems to be occuring, with markd down coming later all, in the schematics which is currently in Phase B , there is phase c and phase d to come before a mark down happens and i expect a climactic upthrust UT [or followed by another UTAD] to happen in phase c before formation of LPSY last point of supply in phase d before mark down happens maybe in next year…
supports for the future markdown around the 100 weekly wilder moving average and the 38.2% and 50% fibonacci retracement to be watched…
Meanwhile the bull traps in upthrusts must be identified and avoided…
disclaimer… tracking , no current investments