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Vinati Organics said credit rating agency CARE Ratings has affirmed the company’s long-term rating at ‘CARE AA+’ with a ‘stable’ outlook.
The agency also affirmed the company’s short-term rating at CARE A1+.
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CARE Ratings said the ratings assigned to Vinati Organics’ (VOL) banking facilities draw great comfort from its market leadership in its two key products, 2-acrylamido-2-methylpropane sulfonic acid (ATBS) and isobutylbenzene (IBB) worldwide. walk.
CARE Ratings believes that VOL’s competitive advantage in its two product segments is expected to be sustained in the medium term, as the manufacturing processes are not easy to replicate and also pose a barrier to entry for new entrants.
The ratings continue to draw strength from the sponsors’ long track record and track record in the specialty organic chemical industry. VOL continues to benefit from long-term relationships with an established and reputable customer base across all geographies. The upstream integrated manufacturing process, with zero rejects and cost-effective VOL operations, acts as a barrier to entry for new entrants.
The ratings derive strength from healthy operating cash flows, favorable capital structure, strong liquidity and debt coverage metrics.
The ratings continue to be tempered by the concentration of its total operating income (TOI) on limited key products and VOL’s operating margin sensitive to commodity prices and exchange rate fluctuations.
The credit rating agency said significant growth in TOI, driven by increased demand for existing products and effective product profile diversification, while maintaining an operating margin of around 27-30%, could lead to positive rating action.
However, factors such as significant debt-financed organic or inorganic expansion undertaken by the company which will have a negative impact on its capital structure and a weakening of its return on capital employed (ROCE) below 15% having A negative impact on its debt coverage indicators could lead to negative rating action.
Vinati Organics is one of India’s leading manufacturers and exporters of specialty organic intermediates, monomers and polymers. VOL is the world’s largest manufacturer of isobutylbenzene (IBB) and 2-acrylamido 2-methylpropane sulfonic acid (ATBS).
The stock lost 0.14% to currently trade at Rs 1989.95 on the BSE.
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First publication: October 10, 2024 | 12:56 p.m. STI