Bullish on Vinati Organics, could give significant upsides from current levels: Vinay Khattar

In a chat with ET Now, Vinay Khattar, Head Research (Individual Clients), Edelweiss Financial Services Limited shares his views on Vinati Organics. Excerpts:

ET Now: Give us one stock idea from the export oriented theme?

Vinay Khattar: There are a couple of names that we specifically like on the export side. One of the names which we really like is Vinati Organics. It is kind of a specialty chemical manufacturer company, a very small cap stock.

It makes two important chemicals -- one, which is an ingredient for making ibuprofen and it is the world largest manufacturer of that particular chemical.

The second chemical goes into the extraction of shale gas and shale oil. Demand for this particular chemical is shooting up very significantly, because we know that the shale story is playing out quite well in the US. Most of the product is exported to the US and the important point is that there are only three manufacturers of this particular product -- Lubrizol, Vinati Organics and a Japanese company.

This gives you a huge visibility, in terms of both demand as well as pricing, which is playing out in Vinati’s favour. Secondly, with the depreciation in rupee that you saw in the last five-six months, margin contraction has happened, though it appears that it is going to be a short term affair and the margin should come back to a more normalised level of 22-23%, but Vinati could be a very interesting long term bet for investors to look at.

ET Now: So over a two years frame, do you believe this stock could be a multibagger or a double or a treble?

Vinay Khattar: It could be, over a two to three year frame given the way demand is picking up and also given that some of the company's forays into other speciality chemical segments would begin to yield results. This stock could give you significant upside from the current levels.