Mehabe score: 4 G Factor: 3 Piotski Score: 4 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 4.
Description
Vinati Organics is engaged in manufacturing of speciality organic intermediates and monomers.
Main Points
Key products
IBB: #1 manufacturer with a global market share of 65% as of FY20. # IBB is the raw material for ibuprofen and Vinati is one of the largest global producer of IBB. The current installed capacity is 25’000 MTPA. #Site:VINATIORGAMain Symbol:VINATIORGA
Stock trades at 1979.0, above its 50dma 1853.81. It also trades above its 200dma 1542.21. The stock remains bullish on techicals
The 52 week high is at 2132.00 and the 52week low is at 946.80
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– has a good return on equity (ROE) track record: 3 Years ROE 25.31%
– has been maintaining a healthy dividend payout of 17.52%
Weakness
– Stock is trading at 13.18 times its book value
-The company has delivered a poor sales growth of 8.63% over past five years.
-Debtor days have increased from 85.52 to 106.03 days.
Competition
– The industry trades at a mean P/E of 29.4x. Pidilite Inds. trades at the industry’s max P/E of 102.37x. VINATIORGA trades at a P/E of 75.5x
– Industry’s mean G-Factor is 3.7 while the mean Piotski score is 8.0. VINATIORGA has a G-Factor of 3 and Piotski scoreof 4.
– Average 1 month return for industry is 15.0%. The max 1- month return was given by Gujarat Fluoroch: a return of 52.36 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 386.0 cr compared to Rs 232.0 cr for period ended Jun 2020, a rise of 66.4%
Operating Profits reported at Rs 102.0 cr for period ended Jun 2021 vis-vis 97.0 for period ended Jun 2020 .
Operating Margins contracted -1538.5 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 7.88 compared to Rs 6.89 for previous quarter ended Mar 2021 and Rs 7.03 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1109.0 cr for period ended TTM vis-vis sales of Rs 954.0 cr for the period ended Mar 2021, a healthy growth of 14.0%. The 3 year sales cagr stood at -0.6%.
Operating margins shrank to 32.0% for period ended TTM vis-vis 37.0% for period ended Mar 2021, contraction of 500.0 bps.
Net Profit reported at Rs 278.0 cr for period ended TTM vis-vis sales of Rs 269.0 cr for the period ended Mar 2021, rising 3.2%.
Company reported a poor Net Profit CAGR of -0.5% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 19.0% compared to 25.0% over the last 3 Years. – The stock has given a return of 102% on a 1 Year basis vis-vis a return of 60% over the last 3 Years. – The compounded sales growth on a TTM bassis is -7% vis-vis a compounded sales growth of 9% over the last 3 Years. – The compounded profit growth on a TTM basis is -19% vis-vis a compounded profit growth of 23% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 4.39% vis-vis 3.5% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 14.73% vis-vis 15.15% for Mar 2021
Conclusion
– is almost debt free.
– has a good return on equity (ROE) track record: 3 Years ROE 25.31%
– has been maintaining a healthy dividend payout of 17.52% – Stock is trading at 13.18 times its book value
-The company has delivered a poor sales growth of 8.63% over past five years.
-Debtor days have increased from 85.52 to 106.03 days.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 1853.81 and is trading at 1979.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
