Motilal Oswal's research report on Fine Organic Industries
Fine Organic Industries (FINEORG) reported higher-than-estimated EBITDA at INR1.3b (-29% YoY) in 4QFY24. EBITDAM contracted 140bp YoY to 25.4%, while gross margin improved 450bp YoY to 43.6%, primarily due to stable vegetable oil prices. Management does not expect any volatility in vegetable oil prices, at least for the next few months. PAT dipped 24% YoY to INR1b (est. INR590m). All plants are currently running at optimal capacity, except Patalganga-II, where there is still some headroom for capacity ramp up. Management guided that it would take another 3-4 years for Patalganga-II to reach optimum utilization. FINEORG is currently awaiting the official land allotment letter from the Maharashtra government (~30 acres) in SEZ that it expects anytime now. This would primarily cater to the export markets.
Outlook
FINEORG is currently trading at ~40x FY26E EPS and ~27x FY26E EV/EBITDA. Valuations are expensive for a company that is going to have YoY earnings decline for the next two years (-8%/-2% in FY25/26). Reiterate SELL.
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