Buy Fine Organic Industries; target of Rs 5386: Prabhudas Lilladher

Prabhudas Lilladher's research report on Fine Organic Industries

Fine Organic Industries (FINEORG IN) reported consolidated revenue of Rs6bn in Q2FY26, flat YoY and up 3% QoQ. Domestic demand improved during the quarter, while export demand remained stable. However, higher raw material prices versus last year majorly led to a 270bps YoY decline in EBITDA margin, with a slight sequential increase as well. All manufacturing facilities are operating at full capacity for the company, except for the Patalganga (foodgrade) plant, which the management has previously guided to be expected to achieve full utilization by the end of FY26. During Q4FY25, the company incorporated a wholly owned U.S. subsidiary to establish a manufacturing facility aimed at strengthening supply chain efficiency. Additionally, FINEORG acquired ~159.9 acres of land in June’25. The company has also received environmental clearance (with a few remaining approvals pending) for its Rs7.5bn greenfield project on SEZ land. Construction is expected to commence shortly and will take approximately 18 months to complete. We believe the upcoming SEZ facility and the planned U.S. manufacturing plant will be key growth catalysts.

Outlook

The SEZ project is expected to deliver peak revenue potential of Rs26bn, assuming an asset turnover of 3.5x, and should start contributing meaningfully to topline growth from FY28. At current valuations, FINEORG trades at ~27x FY27E EPS. We maintain our ‘BUY’ rating with a target price of Rs5,386, valuing the stock at 28x Sep’27 EPS.

For all recommendations report, click here