Vinati Organics’ share price has been in an uptrend since it was close to its 52-week low on June 22, 2022, and it has now reached its 52-week high of ₹2,323.80 per share on the NSE. Motilal Oswal believes that the chemical stock’s uptrend will continue and that the stock will reach ₹2,593 per share. Vinati Organics’ share price today is ₹2,236 for every share, implying that the brokerage anticipates a 16% increase in this scrip. The scrip has advised positional investors to ‘buy’ the scrip for a target price of ₹2,593.
The company’s revenue and profitability increased by 69% year on year, according to a Motilal Oswal research report, “backed by a strong growth in volume as well as price hikes taken in FY22 due to an increase in input costs.”
The brokerage went on to say that COVID-caused disruptions increased operating costs due to higher freight costs due to container shortages, as well as higher power and fuel costs. As a result, the EBITDA margin shrank by 10 percentage points. VO’s Profit After Tax (PAT) increased by 15% YoY to ₹2.3 billion.
Following the brokerage report, the company is in the process of merging VAL and VO, which is expected to be completed by the end of FY23, in line with its growth strategy. This will allow for greater synergies, allowing VO to become India’s largest and only backward and forward integrated manufacturer of AOs.
According to the brokerage report on the company’s valuations, “Following a temporary blip in FY22, the demand outlook for the ATBS segment remains positive going forward. Veeral Organics Pvt. (a wholly-owned subsidiary of VO) plans to start producing MEHQ, Guaiacol, and Iso Amylene in 1HFY24, which will propel VO to the next level of growth.”
Motilal Oswal advised positional investors on Vinati Organics shares, saying, We value the company at 45x FY24E EPS to arrive at our target price of ₹2,593. We maintain our Buy rating.”