Finolex Industries Q3 Review: Systematix Maintains 'Hold' On The Stock, Revises Target Price — Here's Why

Finolex Industries' demand remained soft in Q3 and has stayed so in Q4 so far. Intense competition led to higher discounts and impacted on realization and margins. PVC resin volume/revenue grew 30%/34% YoY; Ebit remained low (Rs 6.9/kg, 9.1% margin)..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Finolex Industries Ltd.’s Q3 FY25 (revenue/Ebitda/PBT down 2%/30%/21% YoY) was impacted due to continued soft demand and intense competition. Pipe volume/revenue grew 5%/0% YoY while Ebit contracted 57% YoY (Rs 3.7/kg, 3.2% margin). Demand remained soft in Q3 and has stayed so in Q4 so far. Intense competition led to higher discounts and impacted on realization and margins. PVC resin volume/revenue grew 30%/34% YoY; Ebit remained low (Rs 6.9/kg, 9.1% margin). Cash flows remained healthy with net cash of Rs 23 billion. After a low pipe volume growth in FY25, management sees double digit growth in FY26 on the back of several government schemes. Focus remains on increasing mix of non-agri products to 50% in few years (from 33% in Q3). Annual capex of Rs 1-1.5 billion for two years will be to enhance capacity (50kt addition by H1 FY26 to reach 520kt). Location for the new greenfield plant is not finalized yet. After a weak operating result in Q3, we cut our Ebitda estimates by ~4% on lower margins expectations while keeping earnings estimates unchanged on higher other income. We now expect 10%/8%/10%/10% CAGR in pipes-volume/revenue/ Ebitda/PAT over FY24- 27E (FY19-24: 10% /7%/-1%/5%). Given its low RoCE (~11%) and RoIC (16%) profiles in FY27E, we assign a lower target multiple (22x Pipes FY27E P/E vs. 35x+ for larger peers) and maintain Hold rating with a revised target price of Rs 214..Click on the attachment to read the full report:.Varun Beverages Q4 Results Review: Motilal Oswal Reiterates 'Buy' On The Stock — Here's Why.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Finolex Industries Q3 Review: Systematix Maintains 'Hold' On The Stock, Revises Target Price — Here's Why

Given Finolex's low RoCE profiles in FY27E, the brokerage assigns a lower target multiple (22x Pipes FY27E P/E versus 35x+ for larger peers) and maintain Hold with a revised target price of Rs 214.

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