Finolex Industries Ltd. share price target

Finolex Industries Ltd. (FIL) has reported Q1FY18 revenues at INR 824cr (up ~6% YoY) inline with our estimates. The sales growth was on account of improvement in PVC pipes & fittings/PVC...

Finolex Industries 'Q4FY17 PAT increased 50% YoY to Rs 1.2 bn on firm EDC-PVC spread (Rs 15,000/ MT vs. Rs 6,600/ MT in Q4FY16) leading to doubling of EBIT for PVC segment (~60% of FY17 EBIT).

Finolex Industries Ltd. (FIL) Q4FY17 reported revenues at INR 1,016cr, (up ~10% YoY) on account of improvement in PVC pipes & fittings/PVC resin realization by ~17%/31% y-o-y,...

Finolex Industries (Finolex) is a key branded player in the organised PVC pipes market in India, enjoying a volume market share of ~19%. Its pipes and fittings capacity is 280k TPA, in a growing national market of 1,800k TPA. Only 60% of this market is organised.

Finolex Industries fared relatively well in the face of demonetization with pipe volume down a mere 4% YoY at ~41,000 MT. Firm EDC-PVC spread led to doubling of EBIT in PVC segment (~60% of revenue) to Rs 16,600/MT (the highest ever), leading to 69% growth in PAT to Rs 719 mn.

Finolex Industries Limited (FIL) is India's largest PVC pipes and fittings manufacturer and the second largest PVC resin manufacturer. FIL is promoted by the Finolex group, which holds a 52.5% controlling stake with Finolex Cables holding 32.4% stake here. FIL has manufacturing plants in Pune, Ratnagiri in Maharashtra and Vadodara in Gujarat.The PVC pipes and fittings' plants in Pune, Ratnagiri and Vadodara have a total production capacity of over 230,000 m.t.p.a. The PVC Resins plant manufacturing the main ingredient for pipes i.e. PVC is also based in Ratnagiri and is spread over an area of more than 400 acres, in technical collaboration with Udhe GmbH, Germany with Hoechst...

Finolex Industries Ltd. (FIL) Q3FY17 reported revenues at INR 662cr, (up 6% YoY) on account of improvement in PVC pipes & fittings/PVC resin realization

Profitability improves with margins improvement

Finolex Industries Ltd. (FIL) reported strong performance in Q2FY17 at both operating and earnings level but drop in volume was a disappointment. Though it reported 2% fall in revenue, EBITDA income grew 13% YoY while lower-than-expected interest outgo boosted adjusted earnings by 226% YoY to Rs513 mn. Due to slowdown in economic activities, the company's PVC pipes & fitting business volume saw a decline of 6% YoY to 38.3KT mainly led by lower demand growth from non-agriculture segment. However, due to widening PVC-EDC delta and lower power cost, FIL's EBITDA margin expanded 260bps YoY to 19%. Further, due to significant debt reduction, interest expense was down by 80% YoY to Rs33 mn. Due to demonetization, the...

Finolex Industries Ltd. (FIL) reported strong performance at both operating and earnings level. Though it reported just 6% revenue growth (slightly below our estimate), EBITDA income grew significantly by 25% YoY (better than our estimate) while lower-than-expected interest outgo boost earnings by 36% YoY to Rs980 mn. With the better demand recovery, the company's PVC pipes & fitting business volume saw a strong 14% YoY growth to 66.1KT mainly led by strong agriculture growth. Also, due to widening PVC-EDC delta and lower power cost, FIL's EBITDA margin expanded 357bps YoY to highest ever 23.7%. Further, due to significant debt reduction, interest expense was down by 68% YoY to Rs50 mn. We expect company to report...