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Wallfort Financial
Finolex Ind (Buy)
CMP: ₹269
Target: ₹329
Finolex Industries Ltd (FIL) has posted Q4FY15 revenue in line with our expectation. The company has reported top-line de-growth of 6.56 per cent y-o-y to ₹784.6 crore in Q4FY15 against ₹839.7 crore in Q4FY14. The sales volumes for PVC resin improved 22 per cent y-o-y to 97,505 tonnes and PVC Pipes and fittings improved by 13 per cent y-o-y to 56,966 mt in Q4FY15. Sales volume was impacted by unseasonal rains during the Q4FY15. This is the second quarter in succession when demand was impacted by rains and hailstorm, which is normally a peak season for the company’s products. The company is seeing an uptick in demand of PVC pipe & fitting in Q1FY16 as PVC prices are stabilising.
During Q4FY15, operating profits decreased by 34.86 per cent y-o-y to ₹71.4 crore against ₹109.6 crore in Q4FY14 and corresponding margin declined by 395 bps y-o-y. Net profit has declined by 50.74 per cent to ₹27.7 crore in Q4FY15 and correspondingly margin declined by 316 bps on account of higher tax rate.
The company’s capex plan of ₹30 crore each year to expand its PVC pipe capacity by 30,000 mt each year for the next two years within the existing three plants is on track.
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