Vinati Organics Limited (524200) Earnings Call Transcript & Summary

Well, as promised, let's discuss the quarter 1 performance of Vinati Organics. We have with us, Vinati Saraf Mutreja, the Managing Director of Vinati Organics, who joins us on the show.

Hi, Vinati, good morning. Good to see you as always. Well, before you get to your numbers, just wanted to understand, what is your exposure to the United States? Exports are roughly around 55% of the mix. But to the United States, what is it at? And this recent Trump's tariff tantrum, so to call it. It will have some impact on your business, I'm guessing?

Okay. Good morning. Thanks for having me. So out of the 55% exports of our total company, about 33% out of the 55% is to the United States, of which the bulk of it, 80% is ATBS and related products. So roughly, you can say 25% of my revenue which is exported to the United States, ATBS and related products, which are under exemption from any sort of tariffs. This has been the case since the beginning of the year. So as such, the impact of tariffs is very little. Coming back to the remaining 5% to 6% of my sales, which is to the United States, there is no manufacturing in the U.S. for those products. And hence, in most cases, either the customer is absorbing the tariff or they are lobbying with the government to remove the tariff. Thirdly, 2% to 3% of my revenue, which is some of the Butyl Phenols and the AOs, which are under the tariffs. We -- again, we are still competitive. And if not, we will not sell to the United States. We have many other markets, including India where we can sell that to. So net-net, there's almost 0 to no effect of tariffs on my company sales.

Thanks for explaining that to us, Vinati. So you're sounding very, very confident and you're saying that you've given us the breakup and not much impact to your business. Take that on board. Let's get back to the numbers then. What led to the margin expansion in this first quarter? And is this sort of a margin performance sustainable? What's the outlook for FY '26? We're normally asking for 2 numbers, margin outlook as well as revenue growth.

Sure. See, the margin expansion, and I've always maintained it's because the raw material prices came down in Q1 vis-a-vis Q4. And hence, you saw a slight increase in EBITDA margin from 26% to 30%. Since we have a quarterly lag in our pricing, I still maintain on average on a year-on-year basis, 27% of EBITDA margin is what is sustainable for our product mix. Given that, this year revenue growth, I do expect 15% revenue growth. Again, volume growth may be 20%, but because the raw material prices are falling and are fluctuating, hence, I'm predicting a revenue growth of 15%.

15%, okay. Just wanted you to address the news which came out yesterday, the Anti-dumping duty, which the Commerce Ministry said DGTR is recommended Anti-dumping duty on PVC. Now upstream, downstream, is there any implication anything at all, Vinati, for you as a company?

I mean, look, if the -- if PVC imports come down and more domestic PVC is going to be used, then of course, the demand for my antioxidants increases in India, which anyways has been increasing steadily over the last 4, 5 years. And hence, we are very positive and bullish on the demand outlook of domestic consumption of AOs in India, because that is primarily it goes into plastics.