Accumulate Finolex Industries; target of Rs 213: Prabhudas Lilladher

Prabhudas Lilladher's research report on Finolex Industries

P&F reported soft volume growth of 2.1% YoY due to challenging demand scenario and delays in ADD on PVC resin prices. The company has guided double digit volume growth for FY26, with margin recovery expected as competitive pricing will improve with demand and normalization in channel inventory. EBIT/kg for the P&F segment moderated at Rs10.5 with lower PVCEDC spread at USD 491/MT and 3.2% YoY lower realization. The correction in realization was mainly due to discounts and correction in RM prices. We estimate revenue/EBITDA/adj PAT CAGR of 11.4%/19.5%/27.8% for FY25-27E with P&F volume CAGR of 9.1% and EBITDA margin of 13.2% by FY27E.

Outlook

We have upward revised our earnings estimates for FY26E/FY27E by 4.8%/5.5% and downgrade our rating to ‘HOLD’ from ‘Accumulate’ revised TP of Rs 213 (Rs202 earlier) due to uptick in the stock price, based on 18x FY27E earnings plus valued stake in the group listed entity Finolex Cables at 50% discount to consensus target market value.

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