Vinati Organics Q1 Review - Gross Margin Guidance Revised Down; Revenue Potential Intact: Motilal Oswal

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Motilal Oswal Report

Vinati Organics Ltd. reported mixed results, with revenue above our estimate (up 20%), while Ebitda came in below our estimate (down 8%).

The gross margin shrank to 45% – the lowest since Q3 FY15.

The resultant Ebitda margin stood at 26.3% (versus our estimate of 34.3% and 35.4% in Q4 FY21).

Higher freight costs (by Rs 100 million), along with an increase in phenol and acrylonitrile prices, impacted margins.

Freight costs were the highest for the U.S. and Europe – they are likely to remain at similar levels for the next few quarters as well.

Vinati Organics is in talks with customers to share the cost increase.

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