Buy Fine Organic Industries; target of Rs 5440: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Fine Organic Industries has recommended buy rating on the stock with a target price of Rs 5440 in its research report dated May 30, 2025.

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June 02, 2025 / 13:07 IST

buy

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Fine Organic Industries

Fine Organic (FINEORG IN) has been guiding that its facilities are fully utilized except Patalganga, primarily a food emulsifier plant. While erucamide remains the mainstay of the company as per our understanding, food emulsifier segment in developed markets offers a good opportunity for growth. Fine Organic has often showed its intent to foray into developed markets. Against the backdrop of 22% ROCE and 34% ROIC in past five years (excluding supernormal FY23) that the company has been making in India, it becomes important to see what kind of margins and returns one would make if it were to start manufacturing in a developed country like the US. In a segment with limited information, our report concludes from Corbion-Kingswood recent transaction that even in the US, the segment offers a good ~15% EBITDAM and ROCE of ~15%.

Outlook

Considering the boost that could come from the Indian expansion and possible foray into developed markets, we value the stock at 32x FY27 EPS of Rs170 and raise the target price from Rs4,930 to Rs5,440 and reiterate our Buy recommendation on the stock.

For all recommendations report, click here