The company has delivered on the sales front but saw weak operating profit and benign net profit growth
The net sales of Vinati Organics increased 20% for the quarter ended March 2013 over the same period last year. For the same quarter, operating profit grew 4% y-o-y to Rs37.46, after a particularly dismal third quarter. However, Vinati reported Rs21.46 crore net profit for the quarter ended March 2013 when compared to the Rs20.27 crore for the corresponding period last year.
Vinati Organics has put on a string of consistent showing on the sales front but has disappointed the previous and current quarters when it comes to operating profit. Net sales grew at 20% y-o-y which is inline with the company’s three-quarter y-o-y average growth rate of 22%. The company’s return on networth and return on capital employed are impressive at 24% and 35% respectively. Despite this the market has valued the company cheaply, with market capitalisation quoting at just over three times operating profit.
A closer look into the company’s shareholding pattern reveals that promoters hold 74.99% of the total shares outstanding. Institutions hold 2.37%, while the Indian public holds 22.64%, of the shares outstanding.
The board of directors of the company has recommended a dividend of 125% on the share capital of the Company, or Rs2.50 per equity share of face value of Rs2 each for the year ended 31 March 2013.
Vinati Organics is a specialty chemical company producing organic intermediates, monomers and polymers.
The stock is part of the Kensource Stockletter picks. For more information on Kensource
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ML had rightly reported about Venus Remedies and few other good buys.Pl continue such ideas..