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Vinati Organics: The Deflationary Pressures Continue - Views on News from Equitymaster
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  • Feb 2, 2016 - Vinati Organics: The Deflationary Pressures Continue

Vinati Organics: The Deflationary Pressures Continue
Feb 2, 2016

Vinati Organics announced its results for the quarter ended December 2015. The company reported a revenue decline of 30% YoY, while profits fell by 2% YoY.

Performance summary

  • Net sales down by 30% YoY during the quarter. The sharp decline is due to lower realisations in a deflationary environment.
  • Operating profits fall by 23% YoY during the quarter while margins expand to 28.6% from 26.3% in 3QFY15.
  • Net profits decline by 2% YoY aided by onetime income (Rs 98 million; export duties of earlier years) during the quarter. Adjusting for same, profit before tax would have been lower by 25% YoY (currently down 4% YoY).
  • During 9mFY16, revenues come in lower by a fourth, while operating profits decline by 13% YoY, aided by a margin expansion. Net profits come in higher by 11% YoY helped by higher onetime income of Rs 319 million during the period.

Financial Snapshot

(Rs m) 3QFY15 3QFY16 Change 9MFY15 9MFY16 Change
Net sales 2,021 1,424 -29.5% 5,968 4,465 -25.2%
Expenditure 1,490 1,017 -31.8% 4,546 3,224 -29.1%
Operating profit (EBDITA) 531 407 -23.3% 1,422 1,241 -12.7%
Operating profit margin (%) 26.3% 28.6%   23.8% 27.8%  
Depreciation 45 46 3.0% 133 138 4.1%
EBIT 486 361 -25.7% 1,289 1,103 -14.4%
EBIT margin (%) 24.0% 25.3%   21.6% 24.7%  
Interest 28 20 -27.9% 90 67 -25.7%
Other income 14 15 3.4% 57 42 -26.7%
Prior period items - 98   - 319  
Profit before tax 472 454 -4.0% 1,256 1,397 11.2%
Tax 164 152 -7.5% 422 474 12.3%
Effective tax rate 34.7% 33.5%   33.6% 33.9%  
Profit after tax/(loss) 308 302 -2.1% 834 923 10.7%
Net profit margin (%) 15.3% 21.2%   14.0% 20.7%  
No. of shares (m)       51.6 51.6  
Fully diluted EPS (Rs)*         20.1  
P/E (x)*         20.2  

* trailing 12 months earnings

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