The cash flow of 138 crore in 2018 is expected to increase to 400 crore in 2019. This is a massive increase and might be responsible for the increase in share price. I beleive that Lubrizols exit is going to lead to a massive increase in realisations in the current year, which might be the reason for the sudden con call. I missed HEG and graphite and dont want to miss this one. This is a super star speciality chemicals champion performer and I have initiated a good investment for long term. Good work @hack2abi
Lubrizol had a ~15% market share in ATBS. Vinatiās market share in ATBS has gone up from 40-45% to 60-65%, meaning they have captured most or all of the space vacated by Lubrizol. Also, their market shares in IB & IBB are all extremely high.
I am trying to understand where the future growth will come from?
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It could come from more use of ATBS. But ATBS being a stable chemical it use will more or less be in tune with its user industries and is unlikely to shoot up dramatically. Same for IB & IBB.
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BP can lead to some growth. But can it be 25-30%?
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I think it is not prudent to take management forecast very seriously unless we are sure that the management has a history of being conservative in its forecasts and planning. The need is to question rationally where the expected growth is going to come from.
See the link in the beginning of this thread where the company is saying that they are expecting revenues of 1000cr in next 4-5 years. This was in 2011. They closed FY18 around 750 cr.
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I know about that interview with Mr Saraf, Abhishek. Thanks for sharing it. But that is just one of the many more pointers.
The PAP pilot plant they have set up now was set up in FY09 as well in another location with another process. After that, there was no mention of PAP until FY18. I pointed this out in the recent con call and asked about the history and result of those pilot tests.
Even with ATBS, after commercializing from the pilot plant it took them 4 years to stabilize the quality of their product to sell commercially.
I shared the calculation of those projections because one they do not contain the PAP project. If PAP was included I would not be so sure of the accuracy of those calculations. Butyl Phenols as such is a forward integration for VOL, with the same process as used globally. There is not much technological and commercial risk there being an import substitution product.
Second, even taking the best case scenario guided by the management, I wanted to share with the fellow forum members, how much of the growth is already discounted in the current prices and what buying now means for their investment returns up to FY22.
You are also right, to say we should not take this guidance at face value, but it would be prudent to take management guidance with a pinch of salt when it was not priced in already. In this case, I feel we need to be more prudent of the price we enter in and consider what is priced in first and then on guidance.
We are both being careful, just from different vantage points.
Disclosure: Not Invested.
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Management clearly mentioned in the concall, that Please Keep revenue from PAP out. They are also not considering it
assuming fy19 sales to be 1000 cr and ATBS is 50% of sales so 500 cr. co increasing capacity from 26k ton to 40k ton by apr 19. by by apr 2022, 250 cr additional topline from ATBS( assuming same pricing)- ATBS demand going higher due to higher oil prices as well as used in deep sea oil exploration and assuming mgmt will increased capacity on demand/earning visibility, 350-400 cr revenue expected from butyel phenol and balance growth to come from IBB and other products( ibuprufen demand going higher and vinati already increased capacity to match the same). so,mgmt guidance looks fine assuming the above plays out till 2022 revenues going from 750 cr to 1500 cr plusā¦ if co goes ahead with PAP expansion, that could be the optional value in next 3-5 years.
ATBS has been historically gaining market share since there are only 3 players and Vinati is having lowest cost with very good quality.
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Given the exit of Lubrizol, now market share shift will be slightly slower but logically will increase pricing power since now there are only 2 players. Apart from this I believe it will track underlying industry growth. Similar is case with IB and IBB. Infact there might be some competition here.
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BP and there are few more new products coming on steam which will provide near term growth. As @hack2abi rightly pointed out, even if PAP successfully happens, the current valuation still seem to have discounted next 2-3 years growth. As such 25% CAGR (bottomline) looks achievable given current pipeline.
They have got excellent execution track record. But currently I feel management is having bit bullish tone in terms of guidance. Letās see how it pans out.
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There may be a shortage situation in the market but that need not necessarily extrapolate to the kind of growth that has happened in graphic electrodes. Firstly Iām sure that management has also assumed some price increase in their profit growth assumptions and if after that they are guiding for 30% profit growth, I am not sure we should be more optimistic than themā¦
The company is already priced quite highly, even if one assumes an EPS of 50 this year (annualizing JQ EPS - an assumption which has its own issues) we are still looking at a FY19 PE of 27. Company is fundamentally good and I am long term optimistic on the speciality chemicals space but not sure there is a lot of upside at these levels, though I may be wrong.
Disc - was holding for 3-4 years, exited this week. May look at reinvesting at lower levels
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IB priceās jump 30% in international market due to supply crunch.
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There is no benefit for Vinati, as per my understanding, due to this price rise. BASF is restarting operations on a bigger scale and that may lead to some additional orders coming to Vinati.
IICT TOT to M/s Vinati Organics Ltd, Mumbai
The institute has developed technologies for continuous production of PTBT and PTBBA and transferred the patented technologies to M/s Vinati Organics Ltd, Mumbai (VOL). PTBT is a specialty chemical that is not manufactured on a large scale by any Indian industry. PTBBA prepared by oxidation of PTBT is also a speciality chemical, which is used extensively in manufacture of sun screen lotions through its ester, and polymer industry, for production of anti-oxidants, rust inhibitors in resin coatings and lubricating oil. There is no dedicated capacity for production of PTBBA in the country.
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The reason for the stock price rise today. The Management has upped itās guidance.
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There is also a report published in an international stock analysis forum(taking name may be against forum policy so avoiding it) yesterday which is quite positive and may result in todayās rally.
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Company posted excellent result this quarter which was broadly in-line with management guidance. CWIP increase indicates that CapEx is on track.
One of the recent video where Vinati Saraf talks about business outlook:
Disclosure: Invested
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3 things - I am thinking on what can go wrong for Vinati as a downside protection
- Vinati sells ATBS on Cost+ model and is linked to Crude price. Now on Crude, there is not only significant correction + Oversupply emerging
- IBB - they are already under pressure as operating at 50% capacity
- PAP- hardly any progress
Informed and unbiased views welcome
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Q3 results - Fantastic results from Vinati
https://www.bseindia.com/xml-data/corpfiling/AttachLive/be820617-a5e8-421e-88f0-e4ba284cb272.pdf
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Does any one know any place where can find the transcript of all the concalls or Audio recordings ?
it used to be available on stockadda channel @ youtube until Q2FY19.
however it seems there isnāt anything for Q3 there.
would really appreciate if you can share the details of it for Vinati
Vinati does not have regular concalls, though there was one ad hoc last year. Try Research Bytes from a desktop / laptop, mobile may not work.
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ya dey had mentioned tht they will b conducting it annually. However u can find management interviews on youtube which provide enough info