Accumulate Finolex Industries; target of Rs 238: Prabhudas Lilladher

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26 Aug, 2025 12:21

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We downward revise our FY24 earnings by 9.7% to factor in lower volume growth and EBIT per kg, while marginally cut FY25/FY26 earnings by 2.9%/2% considering gradual improvement over coming years and revise TP to Rs238 (Rs243 earlier) based on 21x Sep’25E EPS plus 50% discount to Finolex Cables’ stake. FNXP reported soft volume growth of 6.2% in its seasonally weak quarter as 60% volumes came from agri segment which is highly pricesensitive, thus, in anticipation of PVC resin price drop, sales volume impacted in Q2FY24. The company reiterated guidance of 15% volume growth in pipes and fittings segment in FY24. PVC-EDC spread, which was USD 571/MT in Q2FY24, had improved FNXP's gross margin to ~40% (EBIT/Kg was Rs 11.5). The spread has since decreased to USD 450/MT in Oct-23, even after management expects EBIT per Kg to be Rs 11-12 for FY24.

We expect Revenue/EBITDA/PAT CAGR of 12.1%/40.5%/39.8% for FY23-26E with P&F volume CAGR of 13.9% and EBITDA margin of 13.7%/14.0% for FY25E/FY26E. Maintain ‘Accumulate’ rating.

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