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Dolat Capital Report
Vinati Organics Ltd.’s Q1 FY21 earnings print showed a disappointment on all fronts. Sales de-grew by 20.4% YoY to Rs 2.31billion (our estimat Rs 2.46 billion).
Ebitda de-growth came in at 19.1% to Rs 972 million (our estimate Rs 903 million). Profit after tax de-growth was cushioned by a lower tax rate of 24% in Q1 FY21 against 34% in Q1 F20, Profit after tax de-growth was at 12.2% YoY to Rs 723 million.
Gross margins and Ebitda margins were at a record high level of 63.4% and 42.0% up by 628 basis points and 70 basis points YoY.
Ebitda margins improved on three accounts,
a) Low cost inventory of Methyl Tertiary Butyl Ether for March 2020, which led to margin expansion in Acrylamide tertiary-butyl sulfonic acid (ATBS),
b) Operating leverage in Isobutyl Benzene (IBB), which was absent in FY20,
c) Incremental sales coming from customized products (high margin products), which were absent in FY20.
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