Prabhudas Lilladher's research report on Finolex Industries
P&F reported decent volume increase of 10.2% YoY in a seasonally weak quarter for agri business. The management indicated its non-agri (urban) segment volume grew by (+9-10% YoY) and agri segment by (+12% YoY). The company has guided for volume growth of 10-12% in FY25, which leads to 16- 20% volume growth in H2FY25. EBIT/kg for the P&F segment rose to Rs5.6 with improvement in PVC-EDC spread, which decreased to USD509/MT (vs USD 533/571/MT in Q1FY25/Q2FY24), with operational efficiency and controlled discounts. We estimate revenue/EBITDA/adj PAT CAGR of 11.7%/16.4%/17.5% for FY24-27E with P&F volume CAGR of 13.1% and EBITDA margin of 15.4% by FY27E.
Outlook
We have downward revised our earnings estimates for FY25E/FY26E/FY27E by 10.4%/6.7%/4.5% and maintain ‘HOLD’ rating with revised TP of Rs302 (Rs288 earlier), based on 22x FY27E.
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