Buy Finolex Industries, target price Rs 173: ICICI Securities
Finolex Industries Ltd., incorporated in the year 1981, is a Mid Cap company (having a market cap of Rs 8153.07 Crore) operating in Plastics sector.
By ETMarkets.com | Updated:
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ICICI Securities has buy call on Finolex Industries with a target price of Rs 173. The current market price of Finolex Industries is Rs 131.5. Time period given by analyst is one year when Finolex Industries Ltd. price can reach defined target.
Finolex Industries Ltd., incorporated in the year 1981, is a Mid Cap company (having a market cap of Rs 8153.07 Crore) operating in Plastics sector.
Finolex Industries Ltd. key Products/Revenue Segments include PVC Pipes & Fittings, Scrap and Other Operating Revenue for the year ending 31-Mar-2021.
Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 1214.88 Crore, down -24.98 % from last quarter Total Income of Rs 1619.33 Crore and up 23.83 % from last year same quarter Total Income of Rs 981.08 Crore. Company reported net profit after tax of Rs 100.61 Crore in latest quarter.
Investment Rationale
Finolex Industries (Finolex) has reported much lower than expected operational performance with EBIT/kg in its PVC pipe segment at Rs5.9 (-24.3% YoY / -50.6% QoQ) due to inventory losses with volume growth of 28.9% YoY (-8.5% QoQ) on a low base. PVC resin segment’s EBIT/kg declined to Rs11.6 (-63.0% YoY, -41.2% QoQ) due to lower spreads with volume increase of 24.9% YoY (-20.8% QoQ), resulting in consolidated EBIT declining 44.8% YoY. Management stated profitability of the resin segment may remain low as PVC prices continue to fall in Q2 and the company is saddled with high-cost inventory. PVC pipe demand is expected to improve in H2FY23 post raw material price stability. We cut our FY23E/FY24E PAT estimates by 14%/5% factoring-in the lower profitability of PVC resin/pipe segments. The brokerage maintains BUY with a revised SoTP-based target price of Rs173 (earlier: Rs181) due to strong balance sheet and inexpensive valuations.
Promoter/FII Holdings
Promoters held 52.47 per cent stake in the company as of 30-Jun-2022, while FIIs owned 5.69 per cent, DIIs 9.81 per cent.
Finolex Industries Ltd., incorporated in the year 1981, is a Mid Cap company (having a market cap of Rs 8153.07 Crore) operating in Plastics sector.
Finolex Industries Ltd. key Products/Revenue Segments include PVC Pipes & Fittings, Scrap and Other Operating Revenue for the year ending 31-Mar-2021.
Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 1214.88 Crore, down -24.98 % from last quarter Total Income of Rs 1619.33 Crore and up 23.83 % from last year same quarter Total Income of Rs 981.08 Crore. Company reported net profit after tax of Rs 100.61 Crore in latest quarter.
Investment Rationale
Finolex Industries (Finolex) has reported much lower than expected operational performance with EBIT/kg in its PVC pipe segment at Rs5.9 (-24.3% YoY / -50.6% QoQ) due to inventory losses with volume growth of 28.9% YoY (-8.5% QoQ) on a low base. PVC resin segment’s EBIT/kg declined to Rs11.6 (-63.0% YoY, -41.2% QoQ) due to lower spreads with volume increase of 24.9% YoY (-20.8% QoQ), resulting in consolidated EBIT declining 44.8% YoY. Management stated profitability of the resin segment may remain low as PVC prices continue to fall in Q2 and the company is saddled with high-cost inventory. PVC pipe demand is expected to improve in H2FY23 post raw material price stability. We cut our FY23E/FY24E PAT estimates by 14%/5% factoring-in the lower profitability of PVC resin/pipe segments. The brokerage maintains BUY with a revised SoTP-based target price of Rs173 (earlier: Rs181) due to strong balance sheet and inexpensive valuations.
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Promoter/FII Holdings
Promoters held 52.47 per cent stake in the company as of 30-Jun-2022, while FIIs owned 5.69 per cent, DIIs 9.81 per cent.
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