Sell Fine Organic Industries; target of Rs 3820: Motilal Oswal

Motilal Oswal's research report on Fine Organic Industries

Fine Organic Industries (FINEORG) reported a muted operating performance, with an EBITDA decline of 10% YoY. Gross margin contracted 120bp YoY to 41.6%, while employee/other expenses increased 100bp/40bp YoY to 6.3%/12.7%. FINEORG has been expanding its global reach by entering new geographies and strengthening its strategic partnerships. The company incorporated a wholly-owned subsidiary, Fine Organics Americas LLC, in the US to set up a manufacturing plant. Moreover, it acquired ~159.9 acres of land in Jonesville, Union County, South Carolina, to support future expansion and manufacturing capabilities.

Outlook

We broadly maintain our earnings estimates for FY26/FY27/FY28 and estimate a revenue/EBITDA/PAT CAGR of 9% for each over FY25-FY28. FINEORG currently trades at ~32x FY27E EPS and ~25x FY27E EV/EBITDA. We value the stock at 27x FY27E EPS to arrive at our TP of INR3820. Reiterate Sell.