Finolex Industries Ltd. share price target

Maintain BUY. Our SOTP TP stands at Rs 861 2QFY18 was a muted quarter for Finolex Industries (Finolex), as (1) Despite volume growth (23% YoY in Pipes & Fittings and 2% YoY in PVC resin), overall revenues grew marginally by 4% YoY to Rs 4.7bn, and (2) Realisation per tonne declined in both segments (-2% YoY in PVC resin to ~68/kg and -16% YoY in Pipes & Fittings to ~Rs 90/kg) , (3) The plant shutdown in Q2FY18 led to a ~Rs 360mn increase in costs, which weighed on the companys overall performance.

Price cuts in PVC pipes dented margin for the pipe division and negated the strong performance displayed by the PVC division wherein EDC-PVC spread continued to be firm.

Finolex Industries Ltd. (FIL) reported weaker set of numbers in Q1FY18 led by higher price discounts and inventory losses owing to fall in PVC prices. Revenue increased 6% YoY to Rs8.2 bn, EBITDA margin declined 465bps to 15.8% while net profit decreased 19% YoY to Rs798 mn. Overall, PVC resin volume grew 20% to 74,998MT while PVC pipes & fittings increased 8.2% YoY to 71,518MT. Overall, PVC resin revenue increased 22% while PVC pipes & fitting grew 5%. We are cutting FY18/FY19 PAT estimates by 11.6%/7.9% on the back of lower than expected result. However, improvement in PVC-EDC delta, strengthening CPVC and...

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