Vinati Organics Limited (524200) Earnings Call Transcript

With that, let's get into another earnings conversation. We do have Vinati Saraf Mutreja, Managing Director of Vinati Organics, joining in. The company's revenue in the first quarter grew by about 28%. The EBITDA, however, grew by just 7%, margins compressed and the net profit on the back of that grew by about 4.5%.

Vinati, thank you so much for joining in. And that really is the first question because you've guided for 26% to 27% margins for FY '27. Now despite the delay in pricing or passing on the raw material price hike, are you confident of this 26% to 27% number? What kind of products will be margin drivers for you by the end of this year?

You hear me?

We can hear you.

Okay. Okay. Great. Great. Sir, this quarter, we saw an improvement in the revenue. A lot of that has to -- a couple of factors have led to revenue growth. One is, of course, the rupee depreciation, 55% of our revenues do come from exports. Also, one significant thing is that the raw material prices increased a lot owing to the Middle East conflict, especially starting in March, April, May. And that -- some of it we were able to pass on as price increase. So that the volume growth we saw in certain products such as antioxidants and certain other new products, and that is what led to the revenue growth. Now consequently, the EBITDA margin did not grow by as much because most of it was just rupee depreciation as well as RMC increasing.

Right, which is why the question. You've guided for 26% to 27% margins by the end of this year, and you're confident of that, right?

Yes. I think that we should be able to maintain even this quarter, I believe the EBITDA margin is in that range of around 26%. And that is taking into account our entire product mix of ATBS, antioxidants, butylphenols as well as IBB and other derivatives.

And in the second half of this year, how much would ATBS contribute in terms of extended capacity because you've increased capacity from, what, 20,000 tonnes per annum to about 60,000 tonnes, that, and even Veeral Organics starts in October 2026. So the second half will have a lot of these new products coming in.

Yes. So ATBS, we have expanded capacity from 30,000 tonne to 50,000 tonne of the high quality, that is the metric. We do expect some demand recovery in ATBS starting October. Veeral Organics, like I had mentioned, the plant is under reengineering, which should get completed by December. And we expect more revenue coming in from January. So the second half should be better than the first half. And hence we expect overall, let's say, volume growth of maybe translating into revenue growth also of at least 15% this year and consequently, margin EBITDA growth as well.

This particular financial year, how much would be the incremental revenue from the ATBS capacity and Veeral this year would do how much because on a steady state, you said could do about INR 120 crores, INR 130 crores.