Kotak Securities recommends buy on Finolex Industries, target price Rs 641

Kotak Securities has recommended a buy on Finolex Industries in the long term with a target price of Rs 641. Shares of Finolex declined 1% to Rs 540 on Friday while the BSE Sensex closed 202.05 points down (-0.49%) at 41,257.74.

Company Financials



For the quarter ended 31-12-2019, the company has reported a Consolidated sales of Rs 699.40 Crore, up 21.28 % from last quarter Sales of Rs 576.67 Crore and down -7.56 % from last year same quarter Sales of Rs 756.61 Crore Company has reported net profit after tax of Rs 90.49 Crore in latest quarter.

The company’s top management includes Dr.Sunil U Pathak, Mr.Shrikrishna N Inamdar, Mr.Saurabh S Dhanorkar, Mr.Sanjay S Math, Mr.Sanjay K Asher, Mr.Prakash P Chhabria, Mr.Prabhakar D Karandikar, Mr.Kanaiyalal N Atmaramani, Mr.Dara N Damania, Mr.Anil V Whabi, Mrs.Ritu P Chhabria. Company has P G Bhagwat as its auditors As on 31-12-2019, the company has a total of 124,095,381 shares outstanding.


Investment Rationale


The brokerage has valued the stock at 18 times forward PE. Finolex would be a major beneficiary from government’s focus on irrigation, providing piped water to all by 2024 and improvement in rural consumption in long term, said the brokerage. Kotak has revised its estimates for FY20 and FY21 based on 9MFY20 results and expected pickup in demand from agri side. The stock is trading at PE of 17.4 times FY20 estimated earnings.