Finolex Industries Ltd would be a major beneficiary from the government’s focus on irrigation, providing piped water to all by 2024 and improvement in rural consumption in the long term.

Chirag Batavia • 30 March 2021

Finolex Industries Ltd

  • FIL would be a major beneficiary from the government’s focus on irrigation, providing piped water to all by 2024 and improvement in rural consumption in the long term.

  • The management has maintained positive demand outlook in the longer run in PVC pipes business and expects higher volume growth in non-agri category.

  • FIL believes that there is an opportunity to gain market share as weaker companies (particularly from unorganized space) may find difficult to sail though in the current challenging macro environment.

  • We believe that the higher spread and demand supply mismatch in PVC resin would positively impact resin margin in the near term. Margin outlook for Q4FY21 remains strong based on recent trends in PVC-EDC spread.

  • We value the stock on sum of the parts (SoTP) basis and arrive at fair value of Rs730, where we value PVC pipes business at 15xFY23E EV/EBITDA (operating profit) and PVC Resin business at 7xFY23E EV/EBITDA.

Finolex Industries Ltd: ADD

Dated: 30 th March 2021

CMP: Rs.618

Fair Value: Rs.730

Potential Upside: 18.1%
Market Cap: Rs.7675 Cr
Time Frame: 12 months


Note: The above is a brief note on the company, based on the inputs of a PCG research report dated 3 rd  February 2021, which is available on their website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental .      

Disclaimer: http://bit.ly/2n5AxIE


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Lakshit Financial Authorized Person of Kotak Securities Limited in cash segments of BSE & NSE and NSE F&O segments with NSE. Lakshit Financial registration number: BSE CASH AP0106730124228 | NSE CASH AP029177621 | NSE F&O AP029177621.Registered Office: Lakshit Financial, ASM 7, Ashwin Sector, Mumbai Agra Highway, CIDCO, Nasik 422009, Maharashtra, India. Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051. SEBI Registration No. INZ000200137 (Member of NSE, BSE, MSE, MCX & NCDEX). Member Id: NSE-08081; BSE-673; MSE-1024; MCX-56285; NCDEX-1262. AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97.

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