Finolex Industries falls 4% after Q3 show disappoints Street

Finolex Industries posted around 24 percent YoY growth in net profit at Rs 89.21 crore.

Shares of Finolex Industries slipped four percent in trade on January 23 after the pipemakers’ quarterly earnings results came in under expectations. At 1 pm, Finolex Industries stock was quoting Rs 225 per share on the NSE, lower by 3.8 percent compared to the previous session’s closing price, extending losses. Over the past five sessions, the stock has fallen more than 6 percent.

Finolex Industries posted around 24 percent YoY growth in net profit at Rs 89.21 crore for October-December of the financial year 2023-23, despite a decline in income from operations. However, on a sequential basis, there was a decline of 2.5 percent in net profit.

The sales revenue slipped by 9.3 per cent to Rs 1,019.69 crore during the reporting quarter while the finance cost rose to Rs 7.7 crore from Rs 5.13 crore year-on-year.

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Finolex Industries reported weak results with pipes and fitting/resin volumes slipping 10 percent/32 percent on-year due to destocking on fears of PVC price decline, said Nuvama Institutional Equities.

Additionally, InCred Equities added that weak agriculture demand and a high base led Q3 pipe & fittings sales volume to decline. “Despite a strong recovery in sales volume expected for pipe & fittings and resins, a high base quarter and flattish margin QoQ would lead to an optically weak Q4FY24,” added the brokerage.

In the management call, the company’s chiefs were confident of growing the non-agri segment by 15 percent for FY24. However, for the agri segment, the management stated that demand has not picked-up yet. Finolex Industries aims to double its pipe volumes in the next 4-5 years.

Yes Securities maintained its sell call on the company, with a target price of Rs 185 per share. InCred Equities retained its reduce rating, with a price target of Rs 182 apiece.

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