Why is Vinati Organics’ stock price soaring?

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Why is Vinati Organics' stock price soaring?

Chemical stocks rose and turned out to be the best multi-bag stock

The Indian chemical industry He is an important contributor to the Indian economy. It contributes approximately 7% of the country’s GDP. India holds a strong position in the chemical trade and is ranked 14The tenth in export and 8The tenth in imports.

The growth can be attributed to the improved outlook and the fact that the Covid pandemic has accelerated the shift from China to other countries.

After the collapse of Covid in March 2020, chemical stocks rose dramatically and turned out to be The best stock multibagger.

However, as the cost of raw materials began to increase, stocks of chemicals came under pressure.

Tailwinds in the form of chemical prices and operating leverage have already been implemented, and Mr Market has noticed the high valuations that chemical stocks have been trading at.

As it stands now, chemical stocks are starting to see an upward trend again. And this time for different reasons.

Among the lots, Vinati Organics, a prominent specialty chemicals company, experienced a sharp upward trend.

Shares of Vinati Organics have been in an uptrend for the past few weeks. In fact, the stock rose 3% earlier this week to approach a 52-week high.

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Here’s why the company’s stock has gone up…

#1 Devaluation of the rupee

Indian chemical stocks witnessed a trend reversal on the back of the depreciation of the rupee.

With the continued weakness of the Indian rupee against the US dollar, stocks of chemicals destined for export have benefited. That is because exporters receive more rupees for their dollars.

The depreciation of the rupee has made chemical stocks attractive from a medium-term perspective as they tend to benefit from the realization of exports.

As a result of this, stocks of Indian chemicals such as Vinati Organics and Tata Chemicals rose by 5-35%.

Apart from these, here is a list of other Indian chemical stocks and there is a 3-month high.

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#2 Strong Finance and Capital Expenditure Plans

In its most recent quarterly results, Vinati Organics reported a 69% YoY jump in revenue for the June 2022 quarter at 16.9 billion rupees.

Its net profit also increased by 25% YoY to Rs.1 billion from Rs.809 million in the same quarter last year.

This growth is attributable to the strong volume growth and price increases that occurred in FY 2022 due to the increase in input costs.

Apart from this, management is confident that its niche product portfolio, expansion of its existing capabilities, and entry into new products will enable it to maintain its revenue momentum strong.

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The company, as part of the expansion, will expand its ATBS chemicals manufacturing capacity to 60 billion tons from 40 billion tons due to strong demand.

The Specialized chemical company It has also invested 2.8 billion rupees in Veeral Organics, as part of its capital plan. This is to deliver 5-6 specialty chemical intermediates including 2,000 tons of quinol (MEHQ), Guaiacol and 30,000 tons of amylin.

These products are used in polymerization inhibitors, flavors, fragrances, pharmaceuticals, and pesticides.

How have Vinati Organics stock been performing lately

Vinati Organics’ stock has had excellent long-term returns, having gone up 4 times in the past five years.

However, the stock is up more than 11% in 2022 and 23% in the past year.

Vinati Organics shares touched a 52-week high of Rs 2,323.8 on July 26, 2022 and a 52-week low of Rs 1,674 on Feb 24, 2022.

It is currently trading at a PBV (Price to Book Value) of 11.9 times.

Vinati Organics stock price performance – to date

vmff5t8About Vinati Organics

Vinati Organics is a leading manufacturer of specialty chemicals and organic intermediates. The company is present in more than 35 countries around the world.

The product range includes aromatics, synthetic monomers and synthetic polymers.

It is the world’s largest manufacturer of Isobutyl Benzene (IBB) and 2-Acrylamido 2 Methylpropane Sulfonic Acid (ATBS).

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Disclaimer- This article is for informational purposes only. It is not a stock recommendation and should not be treated as such.

This article was published by Equitymaster.com.

(This story has not been edited by the NDTV crew and is automatically generated from a shared feed.)