Vinati Organics Ltd. (VOL) is a specialty chemical company producing aromatics, monomers, polymers and other speciality products. Today, the company is a leader in its field and has a sturdy market presence in over 25 countries.
IBB, a specialty organic intermediary, is used as a raw material for the manufacture of Ibuprofen, an anti-inflammatory analgesic bulk drug. VOL has achieved a record purity level of 99.8% for IBB as against the prevailing international standards of 99.5%. Thus, it has become a reliable supplier for leading producers of Ibuprofen across the world.
2-acrylamido-2-methylpropane Sulphonic acid, a specialty monomer finds several applications in oil-field recovery, water treatment, acrylic fibre manufacturing, adhesives, personal care products, medical hydrogel, mining industry, coatings and as dispersing and flocculating agents. Superior technology and strategic capacity expansion plans have made VOL the world’s largest manufacturer of both 2-acrylamido-2-methylpropane Sulphonic acid and IBB.
- VOL has earned distinction of being the only specialty chemicals company in the world to be backward integrated. In June 2010, the company successfully started producing Isobutylene (IB), one of the key components used to manufacture 2-Acrylamido-2-methylpropane sulphonic acid. Apart from being used internally, IB is also sold to agrochemical and antioxidant industry.
- Great Management Quality- The way the business has been scaled with low to moderate leverage, backward integration, clear management commentry, etc. are things to acknowledge here.
- Market Leader- 65% Global IBB market share held by VOL, 45% Global ATBS market share held by VOL, 70% Domestic IB market share held by VOL.
- VOL has shown consistent growth over the years- 10 year sales CAGR of over 33%, 10 year profit CAGR of over 57%, 10 year Return on Equity of over 32%.
- Capital Expansion to the tune of Rs. 200 Cr. under way.
- High barriers to entry in the form of expected product quality, patented ATBS technology.
- Looking to introduce new products in the market.
At current price of around Rs. 460, it is trading at a trailing PE of approx. 18. Tad expensive but quality ain’t cheap 🙂
No target. Keep it for ever!