Comments
Kotak Securities
Finolex Industries (Buy)
CMP: ₹427.8
Target: ₹514
We believe that, Finolex Industries (FIL) would be a major beneficiary from government’s focus on irrigation, providing piped water to all by 2024 and improvement in rural consumption in the long term. We believe that the demand of PVC pipes from rural segment in the near to medium term would depend upon the tenure of lockdown and time for normalising macro environment.
We expect the margins in PVC resin business to soften in the coming quarters on softness in PVC EDC delta post Q3FY20. We have revised our estimates for FY20E/FY21E/FY22E to factor in the impact of Covid-19. The stock is presently trading at PE of 14.1x/14.6x/12.8x based on FY20E/FY21E/22E revised EPS of ₹30 (vs ₹31.2 earlier)/ ₹29.1 (vs ₹32.1)/ ₹33.2 (vs ₹36.7), respectively.
We maintain ‘Buy’ on the stock with revised target price of ₹514 (vs ₹641 earlier), valuing the stock at 16x (vs 18x earlier) forward PE, as we have factored in the increased risk related to demand slowdown.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.