Neutral Fine Organic Industries; target of Rs 4280: Motilal Oswal

Motilal Oswal recommended Neutral rating on Fine Organic Industries with a target price of Rs 4280 in its research report dated July 27, 2023.

Broker Research

July 31, 2023 / 21:52 IST

neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on Fine Organic Industries

Fine Organics (FINEORG) reported in-line earnings in 1QFY24. EBITDA stood at INR1.5b, in line with our estimate. EBITDAM improved by 170bp QoQ to 28.5%, and gross margin increased by 380bp QoQ to 42.9%. The decline in revenue was primarily due to lower prices. The US and European markets recorded lower volumes amid recessionary pressures. The company witnessed a slowdown across its product range. High-priced contracts with customers will return to normal levels upon renewal. The management expects to sustain EBITDA margin at ~20%. All plants are currently running at optimal capacity, and there is potential for a further ramp-up in the Patalganga plant (Phase II). However, the management has ruled out debottlenecking existing capacities due to safety concerns.

Outlook

FINEORG's current valuation is at 37x FY25E EPS and 25x FY25E EV/EBITDA. Our TP of INR4,280 is based on 35x FY25E EPS. Given the expensive valuations, we maintain a Neutral rating on the stock.

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