Accumulate Finolex Industries; target of Rs 217: Prabhudas Lilladher

Prabhudas Lilladher's research report on Finolex Industries

P&F reported soft volume growth of 1.7% 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 demand and normalization in channel inventory. Consolidated EBITDA/kg for the P&F volume moderated at Rs10.2 with lower PVC-EDC spread at USD 522/MT and lower realization. The correction in realization was mainly due to discounts and correction in RM prices. We estimate revenue/EBITDA/adj PAT CAGR of 7.7%/13.7%/24.3% for FY25-27E with P&F volume CAGR of 7.0% and EBITDA margin of 12.8% by FY27E.

Outlook

We have downward revised our earnings estimates by 5.0%/2.9% for FY26E/FY27E and upgrade our rating to ‘Accumulate’ from ‘HOLD’ revised TP of Rs217 (Rs222 earlier) due to correction in the stock price, based on 20x FY27E earnings plus valued stake in the group listed entity Finolex Cables at 50% discount to consensus target market value.