Vinati Organics Limited (VINATIORGA) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Vinati Organics Limited Q4 FY26 earnings conference call, hosted by Nuama Institutional Equities. As a reminder, all participants will be in the lesson-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start, then 0, and a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Archit Joshi from Novama Institutional Equities. Thank you, and over to you, sir.

Good afternoon, everyone. Thank you for joining the Q4F526 Earnings Conference Call of Vinati Organics Limited. We have with us from the management today, the CEO and managing director of the company, Vinati Saraf Nutreja, CFO of the company, Mr. Gushan Sakuja, and AGM corporate finance, Mr. Aditya Churiwala. We will begin the call with opening remarks on the management, followed by a Q&A session. Before beginning the call, I would like to state that the con call may contain forward-looking statements, which are subject to management's discretion and judgment, and may not materialize as projected, given the business risks associated. Now, without further ado, I would like to hand over the call to the management. Over to you, Gulshanji. Thank you.

Thanks, Ashish. Good afternoon, everyone, and thank you for joining us for FY26 Results Conference Call. I will begin with an overview of our financial performance for the quarter and the fiscal year ended 31st March 2026. On a standalone basis, in Q4 FY 2026, net income including other income increased by 17%, rising from 538 crores in Q3 FY 26 to 631 crores. Abita grew by 20%, 203 crores compared to 169 crores in the previous quarter. Profit after tax registered a strong growth of 27% increasing from 108 CR to 137 CR. For the whole year, net income including other income remained stable at 2281 CR. However, EBITDA grew by 17% to 741 CR from 630 CR in F5 2025, while PAT increased by 18% to 488 CR compared to 415 CR in the previous year. On a consolidated basis, in Q4 F5 2026, net income, including other income, increased by 16%, rising from 540 CR in Q3 F5 26 to 624 CR. EBITDA grew by 15% to Rs 191 CR compared to 165 CR in the previous quarter. Profit after tax registered a strong growth of 23%, increasing from 101 CR to 123 CR. For the whole year, net income, including other income, remained stable at 2280 CR. However, EBITDA grew by 13% to Rs.707 CR from 625 CR in F5 2025, while PAT increased by 9% to 444 crores compared to 405 crores in the previous year. Moving to operational performance, our business segments continued to perform resiliently in the context of prevailing market conditions supported by operational improvement and a strong customer-centric approach. Our global market share in ATBS remained robust, reinforcing our leadership in this segment. While demand softened from October 2025 impacting our ability to meet the whole year target, we have witnessed a recovery. And expect approximately 15% to 20% volume growth in F5-2027. Butyl-Penuble segment delivered steady performance in F5-2026, and we anticipate moderate growth in F5-2027, supported by improving demand conditions. IB and HPE-MTBE reported a stable performance during the year, and we expect both products to achieve double-digit growth in F5-2027. IVV volumes declined by approximately 20% compared to F5-2025. This is partly attributed to the unavailability of key raw materials involved in the manufacturing of IVV on account of Iran war. This concrete has now been allied and production and sales are back on track. Our customized product segment recorded strong growth of 10% year-on-year driven by increased customer demand. Our antioxidant business delivered an impressive 15% revenue growth in FY2026, despite a challenging market environment. We expect this segment to maintain strong momentum in FY2027, supported by market expansion and ongoing product development. Overall, we are targeting approximately 15% volume growth at the company level in FY2027. Turning to a capital expenditure, our investment strategy remains closely aligned with our long-term growth objectives. In F5-2026, we incurred approximately 270 crores in CapEx, including investments in VOPL, towards capacity expansion, new product development, and operational scalability. We successfully completed our ATBS capacity expansion during the year, significantly enhancing our ability to meet growing demand. Our commitment to innovation remains strong. The R&D team is currently working on new products which, upon successful trials, could form the basis for the next phase of capital investment in the coming quarters. Looking ahead, we have earmarked approximately 200 to 250 crores of capex for FY27, ensuring continued investment in capacity expansion innovation and operational efficiency. Under VOPL, the 100-pron subsidiary of VOPL, a few projects require process re-engineering, which is expected to take approximately 6 months, with revenue contributions anticipated from Q3 of FY2027 onwards. We would like to highlight that the company has been achieving all its expansion goals through internal approvals, and it remains debt-free. In addition, the company has a treasury of approximately 190 crores as on 31st March 2026. The board of directors has recommended a dividend of Rs.8, Rs.50 per equity share of face value of Rs.1 for the financial year 25-26, subject to the approval of the shareholders at the ensuing AGM. Thank you. I now welcome your questions for the Q&A.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Rohit Nagraj from 361 Capital. Please go ahead.

Thanks for the opportunity, and congrats on good set of numbers. First question is in terms of the new product that we are planning to introduce. So, these products, which particular user segment are these targeted, and when do we expect the projects to be commissioned, because as of now, beyond the current ATBS capacity expansion and few other products, we don't have any other projects which are under commissioning. So, just a broader understanding on the future growth prospects from these products and CAPEX prospective. Thank you.

Good afternoon. So some of the projects, products that are under implementation, most of them are downstream processes, as in downstream integration for our products, value-added products. They will be catering to segments such as the fragrance industry, such as personal care, antioxidants in the food additive business, but most of them, I think, what's important, they are niche chemicals. We are targeting niche chemicals going forward. Some are also in the plastics segment.

Right, and these particular projects will come online sometimes during FY27, and slowly we will find the revenues coming from FY28?

In this current financial year, 26-27, you can expect two or three projects are in a pipeline, and it is expected to come in the second half of this financial year.

Yeah, so revenues in FY28, you're right.

Perfect, perfect. Thanks. The second question is, if you can just provide us FY26 revenue breakup across the large number of products, that would be really helpful. Thank you.

If I go with a breakup in a percentage terms, you can say one-third approximately. It's attributable to the ADBS. 35% you can say in that range. 15-20% is in the form of antioxidants, AO, 10-12% in the form of AB, 10-12% in IVB, and rest others that you can say that are customized in other words.

Perfect. Just one last reason. In terms of the raw material availability and supply chain, both in terms of imported products and our exports, what is the current situation that we are facing over the last couple of months? Any challenges thereof, and how have we mitigated them? Thank you.

At the initial stage, if I talk about when this war was started in the month of Feb, we earlier thought that there would be some challenges that would come in the form of availability of raw material and logistics. But somehow in the initial stages, we saw some issues. But now over everything has been cleared and now we have been not facing any sort of non-ability of raw material and as far as that logistics is concerned, it is steaming.

Yeah, it's quite stable right now.

Perfect. Thanks a lot for answering all the questions and all the best.

Thank you. Next question is from the line of Surya Narayan Patra from Philip Capital. Please go ahead.

Yeah, thanks for the opportunity, ma'am. So, my first question is on the ATBSI. We have indicated that there was some volume impact as well as price-related impact that we would have seen in the current fourth quarter. So can you give some sense that, okay, obviously it seems that in the U.S. market we would have seen the benefit of the pro-oil policy of the U.S. government, but It was looking like from the various data point that the volume demand in non-US market, it was a bit slow or low. Any challenges that we are facing in terms of the ATVS volume in the non-US market and what would be our outlook?

The ATBs remains a stable product, you know. Of course, there are fluctuations geographically and more related to stocking, destocking. Generally, I still think, given the oil prices, and, you know, I think this product is still on a growth path in a two-digit number annually. Having said that, you know, we have expanded our capacity.

There is one or two smaller capacity that has come up.

Given all of that, I think, you know, from an AT-based business purely, I would personally expect, say, 15% volume growth year on year, at least for the next three years, which would take care of our expansion.

So, regards ATBS again, the second phase of the expansion, whether that would be required in this current financial year or not?

Well, actually, it will come into effect by October, but yes, I think more utilization will happen next financial year, more in FY28.

Sure. One clarification, ma'am, whether you mentioned that Virola Organics would not be contributing anything in this current financial year, FY27?

As per as our 100% facility, VOPL is concerned, this year means there was hardly any sale of around 10 CR in that... In 26. In 26?

In 27, you are expecting about 100, 120 crores after the re-engineering is done.

Thank you.

From third quarter onward. Second quarter onward, you will see the revenue from our 100% subsidiary. Okay.

So there were two major project groups. It was like MEHQ vehicle first one, which has already been commissioned. Whether that revenue stream would be coming active in this current financial year, ma? For 100 crore kind of?

Yes, that is absolutely the main one.

Sure. And just last one, you mentioned about the capex of around 250-odd crore. If you can just elaborate, what are the kind of capex projects that you would be considering this year?

Earlier, they will be value-added products of our existing products going into industries such as food additives, fragrance industry, plastic additives.

Okay.

I'll tell you, we will be making a derivative of MEHQ, we will be making derivatives of butylphenols, we will be adding a couple of antioxidants. Future now, again, we have not announced part of this CAPEX, but going forward, we may be looking at more monomers and polymers also, but that is not confirmed yet.

Okay, just last one clarification from my side. You possibly somewhere mentioned that the butylphenol capacity is like fully utilized currently. So are we thinking of expanding that further from the current 50,000-odd tons capacity? We are thinking of reducing the external sale and using Captively more so that our growth plan should be achieved.

I think use Captively capacity currently is around 70%, 75% utilization. And honestly, I don't have space for increasing there. So, if say the AO demand goes up, it will be first used for Captive. If it means that, you know, foster of external fields, and then we will see.

Sure. Okay. Yeah. Thank you, man. All the best.

Thank you. Next question is from the line of Diksant Gupta from GeoJIT PMS. Please go ahead.

Good afternoon, ma'am, and thank you very much for the opportunity. So, just first clarification was I wanted to know what is the use case of ATVS like EOR and water treatment and other uses?

You know the uses already, you are telling me.

No, I mean the percentage-wise.

See, it depends on the polymer. ATBS-based polymers, ATBS can be combined with acrylite acid, with other monomers. It can go up to, you know, 10 to 33 percent of these polymers can have ATBS or AMPS component. And those polymers, like in oil recovery, they are used for oil drilling, but these polymers have other uses also, such as in superabsorbents or personal care industry or detergents or the mining industry or water treatment also.

And do you see any big opportunity in LNG extraction since a lot of share is probably expected to shift to U.S. in that? Are you talking about shi, yes? Yes, yes.

It is used in sacking also, but see, we don't supply to these guys directly. We supply ATBS to the polymer manufacturers, and those polymer manufacturers would be combining it with other monomers, making up polymer, and then supplying to, say, ONGC or Halipotin or Shlambar Jai.

Okay, and have you seen any price changes in ATBS and IHB compared to the last year?

It remains stable. We follow our formula-based pricing mechanism, and that's where it is at.

Okay, thank you so much. That's all from my side.

Thank you. Next question is from the line of Abhijit Akela from Kota Institutional Equities. Please go ahead.

Thank you so much. Just to clarify, this capital work in progress of 210 crores approximately at the end of the year, which specific projects would that pertain to right now? And one extension is of the 250 crore capex we are projecting for next year, FY27, how much of that would come in VOP and the subsidiary?

If we bifurcate this 250 code, but we have projected for F5 2627, in VOPIL, it will go around 40 to 50 CR, not more than that. And 200 would be under Vineti Organics, the main holding company. And if I talk about the CWIP of 200 CR, out of that, 60 to 70 crores is yet to be capitalized under the subsidiary or 100% subsidiary, that is VOPL, and the rest, there are certain products, which are, I mean, under the implementation stage and under the CWIP, that's why it has been shown under the CWIP. So this 120-25 crores of CWIP in VOPL, this will get capitalized in this financial year.

Okay. And ATBS capacity right now is 50,000 tons, is it, after the phase one commissioning?

Yes. See, again, it depends on which molecular weight we are talking about. You know, earlier it used to be the lower molecular weight, so it was 50,000. Today the demand is more for the high-purity, so, you know, then it becomes 40,000. But, yes, each phase is 10,000 tons.

Got it. And would it be possible to just, you know, sum up how much the two phases together are costing in terms of capital? I know we have given some number previously, but just to, you know, get an update on that number.

It's around 250 CR, you can say that.

I thought 300.

250 to 300 CR, including second phase.

Around 300 crores. Yeah, thank you so much. Just one last thing from my side. With regard to the process re-engineering at VOPL, any further color you might be able to share, you know, which products specifically and what exactly is required there in terms of taking it forward?

We went for a new process, you know, and... We faced some teasing troubles there, and then we went to the male consultant and realized that some re-engineering is required. So the plant is presently under re-engineering, and hence it should be done by September, and we expect production from October and so on.

Okay. And the anisole we are producing, proposing to produce in-house or sourcing from outside?

Anisole we will be producing in-house.

Okay. Okay. Got it, ma'am. Thank you so much and wish you all the best.

Thank you. Next question is from the line of Archit Joshi from Novama Institutional Equities. Please go ahead.

Thanks for the opportunity. I have two quick questions. In VOPL, the line of products that we were planning earlier, within which I believe 4MAP is facing certain challenges due to backward integration done by a few customers, that's what we hear. Have we made any plans to discontinue that or would we be still going ahead with the same line of products? And, uh, if yes, then where are we in, uh, commissioning, uh, for MFP and, uh, isoemiline derivatives?

So, isoamiline derivatives have been dropped. As of now, we are not pursuing. We are making a couple, actually, that's right. We are making a couple TAA. Isoamiline has been dropped, tertiary amyl alcohol as well as PTAP.

For MAP also, we will produce.

I have not heard of any customer backward integrating. In fact, we may make something from that product. So, none of this is dropped. Plans remain the same.

Sure, ma'am. Also, for the same kind of gross block addition that we were envisaging earlier, roughly 500 or gross, if I recall correctly, the asset turn you were planning earlier was around one time. Should that be the same in projections for us?

Yeah, it will remain one-to-one.

Got it. One last final one. On antioxidants, I believe that the plan that we had was obviously to consume butylphenols internally, and that could have dropped the potential of butylphenols external sales, and in turn, we would have had a bit more extra on antioxidants, let's say around 700-800 crores kind of revenue of AO. So, just wanted to clarify if that also is on track and if it's 700, 800 or crores, when do we plan to achieve that scale in revenues? That would be the last one. Thank you, ma'am.

It's on track, both AO and butylphenol means it will be in a range of 800 to 900 CR. You will see that in the next two years.

Sure, sir. Thank you.

Thank you. Next question is from the line of Nihar Ka Kamani from CapGro Capital. Please go ahead.

Hello. Hi. So my first question is on the APBS capacity utilization, content capacity utilization, and do we have any other backlog till now? And my second question is more on the industry level. So, like, the sector has faced many hybrids in terms of panel destocking, timing pressure, demand softness, signings over...

Sorry to interrupt, Niharika. Your voice is breaking. It is not very clear.

Can you hear me now?

Yes, please go ahead. Yes, please.

My first question was on the ATPS capacity utilization, and is there any order backlog for ATPS? And my second question is more on the industry level. So, the sector has faced many headwinds such as channel destocking, pricing pressure, Chinese overcapacity, U.S. demand softness. So, where is the industry headed now, and where does Viniti Organic stand among these parameters? See, ATBS, presently we are running at, I would say, about 80% capacity utilization, 75% even after the expansion. So, we are doing pretty good in that regard. What was your second question? The industry growth I mentioned earlier, ATBS does see a double-digit industry growth year-on-year, given its varied applications as well as use in oil and gas.

Yeah.

So, my second question was more in terms of sectoral headwinds that the company has been facing, say, for the last couple of years. So, what are your views? How long will these headwinds continue? And are we on the recovery path, say, in terms of channel de-stocking, pricing pressure, dumping from China? And what's your take on ADD on antioxidants? Like, is the matter still pending? Are we positive on it? Sure, sure, sure. So first of all, we did not hear back for the ADD on antioxidants, which means it was rejected. We have reapplied again for it, because we have a strong case. I believe in the period, about 80 or 90% applications of ADD were rejected, and the Ministry of Commerce is in talks with the Ministry of Finance to give an explanation. Nevertheless, we have reapplied, and if it is to come through, it will still take another six to eight months or nine months for us to hear anything. Talking about the headwinds, yes, the sector has seen a lot of cyclicality in the last few years. Cycles have shortened, people overreact, demand supply, suddenly customers panic and they want to buy a lot and suddenly they realize they have overstocked. So the same with raw material pricing, the fluctuations are steeper than it used to be earlier, as well as with logistics. But I think on the whole, our company has managed these fluctuations quite well. And given, you know, that the products that we are in, we still have strong positions, and we are able to, you know, maintain our margins, we're able to pass on the price decreases and increases, same for logistics costs. And that puts us in a reasonably good position. We've, you know, constantly kept adding products, and we continue to do so without debt, and that will remain the policy going forward as well. Prime Minister, thank you so much.

Thank you. Next follow-up question is from the line of Abhijita Kela from Kotak Institutional Equities. Please go ahead.

Yeah, thank you so much for the follow-up. Just one clarification on the margin trajectory. So, we saw sharp expansion in margins through most of last year. How are we seeing the environment this year? What's the outlook for margins for the upcoming year? Thank you so much.

I think I've maintained an EBITDA margin of 26 to 27 percent. Because, you know, given expansions, new products. Imagine on a long.

Thank you so much.

Thank you. Next question is from the line of Krishan Shah from Dam Capital Advisors. Please go ahead.

Hello. Thank you so much for allowing me to ask the question. Is my voice audible?

Yes, please proceed with your question.

Congratulations for a good set of numbers. May I mention that there is cyclicality that we have seen in the past couple of years? From a longer-term perspective, if we were to look at the business in the next, say, like two to five years, are we looking to diversify and other sort of chemicals or any inorganic expansion by taking on more debt, or are we not looking to go a little bit aggressive?

We are looking at organic expansion. We have a good pipeline of products, products under commissioning, as well as products in the R&D phase. We do feel every year we should be investing around 250.

Thank you so much, Maman. Just one more question. What is the current capacity utilization for the AO plant? I believe it was 50% when we posted a 70% revenue growth in FI25.

Yes, so FY26 has been similar to FY25, maybe 5% growth or something.

So I'm missing out on something. I mean, why have you not been able to see the amount of growth that you were anticipating?

So there is a solution from China in antioxidants, and hence the application for the ADD, and that situation hasn't changed. They are undercutting and selling quite aggressively.

Okay. Okay. Thank you so much. Thank you.

Thank you. Ladies and gentlemen, we'll take this as the last question for the day. I now hand the conference over to the management for the closing comments.

Yeah, thank you. Thank you for taking the interest and asking probing questions. We look forward to hosting you again. Thank you. Thank you.

Thank you so much, sir. On behalf of Nuama Institutional Equities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.