Tushar's Stock Tips: Vinati Organics – A Great Stock to Pick Up

Thursday, September 2, 2010

Vinati Organics – A Great Stock to Pick Up

BSE:524200

NSE:VINATIORGA

Vinati Organics Ltd. (VOL) is a specialty chemical company producing organic intermediates, monomers and polymers. It is listed on the Bombay Stock Exchange and has over 300 employees. VOL is the world's largest manufacturer of Isobutylbenzene (IBB), the basic raw material in manufacture of Ibuprofen, with a capacity of 14,000 TPA. It is also the world's second largest manufacturer of 2-Acrylamido-2-Methyl Propane Sulfonic Acid (ATBS), with a capacity of 12,000 TPA.

Why Buy

Annual results in brief

	Mar ' 10	Mar ' 09	Mar ' 08	Mar ' 07	Mar ' 06
Sales	237.43	195.82	161.36	90.46	65.20
Operating profit	57.31	38.43	25.30	8.32	5.79
Interest	3.36	3.29	3.26	1.97	1.24
Gross profit	53.95	35.14	26.08	8.24	5.33
EPS (Rs)	8.11	5.09	3.07	1.07	0.55

Strong Chances of Bonus

Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Sources of funds

Owner's fund

Equity share capital 9.87 9.87 9.87 6.58 6.58

Reserves & surplus 89.31 55.03 32.79 23.32 20.73

Bonus history

Year	Month	Ratio	Ex Bonus Date
2007	Jul	1:2	22/11/2007

Dividend History

Year	Month	Dividend (%)
2010	May	35
2009	Oct	3
2009	May	25
2008	Jun	20
2007	Jun	12
2006	May	10
2005	Aug	10
2004	Jul	-
2003	Aug	-
2002	Jul	15
2001	Jul	15
2000	Apr	15

Other Reasons:

At Vinati Organics, they have recently doubled the capacity of the ATBS plant to 10,000 tonnes. The capacity addition is expected to result in higher revenues and better operating margins.
The IB plant having a capacity of 12,000 MT has commenced production from June 2010.
VOL executed a backward integration project for the ATBS plant to manufacture Isobutylene (IB), which is one of the major raw materials. The IB plant having a capacity of 12,000 MT has commenced production from June 2010. Besides, VOL also manufactures Normal Butylbenzene (NBB), Sodium Salt of 2-Acrylamido 2-methylpropanesulfonic Acid (NaATBS), N-Tertiary Butyl Acrylamide (TBA), Hexenes and other industrial monomers in small scale. Its cutting-edge research and development unit is engaged in developing product applications and attaining better production efficiencies.

PE ratio 9.20 as on 31/08/10

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