Accumulate Finolex Industries; target of Rs 228: Prabhudas Lilladher

Prabhudas Lilladher's research report on Finolex Industries

P&F volume declined by 5.8% YoY due to early and prolonged monsoon, FNXP has revised its volume growth guidance for FY26 from 10% to mid-single digit with the EBITDA margin of 10-12%. In Q2FY26 CPVC contributes nearly 8%, while fittings contribute 12% to the total volume. Agri:Non-agri mix stood at 56:44 (vs. 61:39 in Q2FY25), and management aims to achieve a balanced 50:50. We estimate revenue/EBITDA/adj PAT CAGR of 9.7%/15.7%/20.2% for FY25-28E with P&F volume CAGR of 9.6% and EBITDA margin of 13.5% by FY28E.

Outlook

We have downward revised our earnings estimates by 6.6%/2.0% for FY27/FY28E and Maintained ‘Accumulate’ rating revised TP of Rs228 (Rs240 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.