Vinati Organics is a leading manufacturer of specialty chemical and organic intermediaries with global market leadership in its two key products- 2-Acrylamido 2 Methylpropane Sulphonic acid (ATBS) and Isobutyl Benzene (IBB). Starting with IBB and subsequent forays into IB, ATBS, Butyl phenols, the company is now moving towards antioxidants.

The company has two manufacturing facilities at Mahad and Lote. In terms of revenue contribution, ATBS constitutes ~40-50% of overall revenue followed by IBB of 20-30% while the rest is from other segmentssuch as IB, Butyl phenols and derivatives

ATBS capacity to be expanded by 20,000 MT with outlay of Rs. 300 crore

Vinati Organics announced a capex outlay in ATBS segment. Capacity is expected to increase by 50% to 60,000 MT. Capex outlay is estimated to be Rs 300 crore and expected to be commissioned by December 2023.

Since ATBS is accretive to the overall group performance, incremental capacity is likely to aid margins post FY24E. We expect payback period of less than three years for the incremental investment

The company also disclosed the name of products for Veeral Organics’ expansion. The products remain MEHQ, Guaiacol and Iso Amylene. This capex is expected to come on stream by September 2023, which bodes well for strong FY25E growth. Vinati targets ~10% market share initially for these products. Capex is around Rs. 280 crore and asset turn to remain at 1x.