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ICICI Direct Report
Vinati Organics Ltd. announced a capex outlay in ATBS (two-Acrylamindo two-Methylpropane Sulfonic Acid) segment. Capacity is expected to increase by 50% to 60,000 million tonne.
Capex outlay is estimated to be Rs 300 crore and expected to be commissioned by December 2023.
Since ATBS is accretive to the overall group performance, incremental capacity is likely to aid margins post FY24E. We expect payback period of less than three years for the incremental investment.
Vinati also disclosed the name of products for Veeral Organics’ expansion. The products remain MEHQ, Guaiacol and Iso Amylene. This capex is expected to come on stream by September 2023, which bodes well for strong FY25E growth.
Vinati targets ~10% market share initially for these products. Capex is around Rs 280 crore and asset turn to remain at one time.
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