Vinati Organics: BUY Rating Confirmed! Prabhudas Lilladher Sees 15% Growth & Margin Boost – Is This Your Next Big Investment?

Prabhudas Lilladher reiterates its BUY recommendation for Vinati Organics, anticipating a robust 15% revenue growth in the fiscal year 2026. This growth is expected to be primarily volume-driven, with EBITDA margins projected to remain strong at approximately 27%.

In the second quarter of fiscal year 2026 (Q2FY26), Vinati Organics reported revenues of Rs 5.5 billion, showing a modest 1.5% increase sequentially and remaining flat year-over-year. The company experienced a significant margin expansion, with EBITDA margins jumping by 590 basis points to 29.9%. This improvement is attributed to a decline in raw material prices observed during the first half of FY26.

The company's flagship product, ATBS (Acrylamide Tertiary Butyl Sulfonate), which accounts for 35% of total revenue, is a high-margin chemical. Its demand is rising in the oil and gas sector, where it serves as a tertiary oil recovery agent. To meet this demand, Phase I of ATBS capacity expansion has already been commercialized, and Phase II is slated for completion by April 2026, which will support future growth.

The antioxidants segment contributed 12% to the revenue mix. New products like MEHQ and Guaiacol, which have a combined potential peak revenue of Rs 4 billion, did not contribute significantly in Q2 as they are still in the approval phase for samples. Their ramp-up is expected to be gradual. Furthermore, plants for upcoming products such as 4MAP, TAA, and PTAP are scheduled to become operational in Q3FY26.

The stock is currently trading at 40 times its fiscal year 2027 earnings per share (EPS). Prabhudas Lilladher values the stock at 38 times its September 2027 EPS, maintaining the BUY rating.

Impact: This research report, with its positive outlook and BUY rating from a reputable brokerage firm, can significantly influence investor sentiment towards Vinati Organics. It provides forward-looking insights into growth drivers, margin sustainability, and capacity expansions, which are key factors for stock valuation. Positive analyst coverage can lead to increased buying interest, potentially driving up the stock price.

Rating: 8/10

Difficult Terms: * ATBS (Acrylamide Tertiary Butyl Sulfonate): A specialty chemical used in various industrial applications, including oil and gas recovery. * Tertiary Oil Recovery: Advanced methods used to extract more crude oil from a reservoir after primary and secondary recovery techniques have been exhausted. * EBITDA Margins: Earnings Before Interest, Taxes, Depreciation, and Amortization margins, a measure of a company's operating profitability. * EPS (Earnings Per Share): The portion of a company's profit allocated to each outstanding share of common stock. * Sequential Growth: The growth rate of a metric from one period to the immediately preceding period (e.g., Q2 to Q1). * YoY (Year-over-Year): The comparison of a metric from a period to the same period in the previous year (e.g., Q2 FY26 vs. Q2 FY25). * Bps (Basis Points): A unit of measure equal to one-hundredth of a percent (0.01%). 590 bps equals 5.9%.