Chemicals Sector Stock Falls 7% In 1 Year, Motilal Oswal Assigns Buy Call For 40% Return

Motilal Oswal has recommended investors to buy shares of mid cap Chemicals sector stock, Vinati Organics Ltd with a target price of Rs 2740 apiece. If you buy Vinati Organics Ltd now, you will potentially receive 40% return, says the analyst. The stock witnessed a decline of 7% in last 1-year. Check details below:

1. Vinati Organics Ltd Stock Performance

The last trading price of the stock on BSE is Rs 1958.45 apiece with intraday fall of 0.66%. The stock's 52-week high is Rs 2372.95 apiece and 52-week low is Rs 1675.00 The stock witnessed a spurt in volume by more than 4.44 times on January 16, 2023.

Shares of Vinati Organics Ltd tumbled 7% in last 1-year, over 2% in last 3-months, 2% in last 1-month, and again 2% in last 1-week. The stock offered return of over 82% in last 1-year. In last 5-years, the stock soared over 305%.

2. ATBS Demand To Remain Strong In The Near Term

ATBS (Acrylamide tertiary butyl sulfonic acid) is a unique versatile compound having a variety of end-user industry applications such as in water treatment chemicals, paints & coatings, adhesives, textile chemicals and personal care.

However, its most important use is in the enhanced oil recovery industry. According to Baker Hughes, the global rig counts have increased to an average of 1,747 in CY22 from an average of 1,361 in CY21 with North America's rig count being at an average of 897 in CY22 v/s an average of 606 in CY21.

3. Valuation And View

According to Motilal Oswal, "The stock is trading at 32x FY24E EPS and 25x FY24E EV/EBITDA, with return ratios of 23-26%. It had a fixed asset turnover of 2x as of FY22. We value the company at 35x Dec'24E EPS to arrive at our TP of INR2,740. Reiterate BUY. Key risk to our call is the upcoming competition in ATBS, which could hurt VO."

4. About Vinati Organics Ltd

Vinati Organics Limited (VOL) is a renowned manufacturer of specialty chemicals and organic intermediaries with a surging market presence spanning across 35 countries in the world. With more than three decades of experience in the industry, Vinati Organics has evolved from being a single product manufacturer to an integrated player offering solutions to some of the largest industrial and chemical companies across US Europe and Asia.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.