Buy Fineotex Chemicals; target of Rs 571: KR Choksey

KR Choksey is bullish on Fineotex Chemicals has recommended buy rating on the stock with a target price of Rs 571 in its research report dated February 21, 2024.

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February 21, 2024 / 14:01 IST

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KR Choksey's research report on Fineotex Chemicals

For Q3FY24, Fineotex Chemicals’(FCL) posted a revenue of INR 1385 Mn growing by 26% YoY and -5% QoQ on a consolidated basis. For 9MFY24 revenue stood at INR 4160 Mn, growing by 10%. Volumes grew by 37% Y-o-Y. EBITDA stood at INR 404 Mn, on the back of 42% gross margins, with EBITDA margin coming in at 29%. with margin expansion of 301 bps. EBITDA for 9MFY24 was INR 1101 Mn growing by 38%. PAT for the quarter came in at INR 329 MN, with margins at 24%, expanding by 320 bps YoY, for 9MFY24 PAT was INR 905 MN growing by 42%. On a standalone basis FCL grew its PAT by ~100%. EPS for the quarter came in at INR 2.95/share, compared with INR 2 in the same quarter last year. For 9MFY24, the EPS stood at INR 8.10, comparing with INR 5.64 a growth of 43%. The Board of Directors have approved a dividend of 1.20/share, a payout ratio of 15% for 9MFY24.

Outlook

Currently, the stock is trading at 41x/31x/23x FY24E/FY25E/FY26E EPS, respectively. We increase our FY26E EPS estimate to INR 19.03 (previously INR 17.7) and assign a PE multiple of 30x to arrive at a target price of INR 570 (previously INR 531). Given the 29% upside from current levels, we retain our “BUY” rating on Fineotex Chemicals Ltd.

For all recommendations report, click here