Broker's call: Finolex Ind (Buy)

| Updated on June 29, 2021

Edelweiss Broking

Finolex Ind (Buy)

Target: ₹221

CMP: ₹179.85

Finolex Industries reported a strong set of numbers for Q4FY21. While revenue/PAT grew 62.5 per cent/409.6 per cent y-o-y (in line with est.), EBITDA surged 296.1 per cent y-o-y (2.7 per cent higher than estimates).

The firm posted record-high revenue of ₹1,249 crore, led by strong resin business, which grew 111 per cent y-o-y due to higher realisations (up 68.4 per cent y-o-y). The pipes and fittings segment reported a heathy sales growth of 42.6 per cent led by a 47.9 per cent growth in realisations.

Gross margin expanded by 1,380 bps to 48.6 per cent due to better realisations in both segments and robust volume growth in the PVC resin segment. EBITDA for the quarter grew 296.1 per cent y-o-y to ₹410 crore, while margin expanded by 1,935 bps to 32.8 per cent (v/s est. 32 per cent), led primarily by an improvement in gross margin and lower employee cost (down 60 bps y-o-y) and other expenses (down 500 bps y-o-y) as percentage of sales.

FIL reported record quarterly PAT of ₹299 crore, up 409.4 per cent; margins expanded 1,630 bps to 23.9 per cent, mainly due to an improvement in EBITDA margin and lower tax expenses. This was despite the decline in share of profit from associate to ₹3 crore .

Published on June 29, 2021

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