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Haitong Securities India initiates buy on Finolex Industries, target price Rs 700

Finolex enjoys a dominant position in India’s agri pipe market due to its competitive edge in backward integration.

Last Updated: Dec 19, 2019, 09.10 AM IST
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Haitong Securities India has initiated coverage on Finolex Industries in the long term with a target price of Rs 700. Shares of Finolex ended down 1.55% at Rs 541.45 on Wednesday while the BSE Sensex closed 206.40 points up at 41,558.57.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 576.67 crore, down -38.90 % from last quarter sales of Rs 943.81 crore and up 6.28% from last year same quarter sales of Rs 542.62 crore. The company has reported net profit after tax of Rs 98.20 crore in the latest quarter.

The company’s top management includes Dr.Deepak Parikh, Mr.Anami Roy, Mr.Anil V Whabi, Mr.Pradeep Rathi, Mr.Prakash P Chhabria, Mr.Sanjay S Math, Mr.Saurabh S Dhanorkar, Mrs.Kanchan U Chitale, Mrs.Ritu P Chhabria, Ms.Bhumika Batra. Company has P G Bhagwat as its auditors. As on 30-09-2019, the company has a total of 124,095,381 shares outstanding.

Investment Rationale

Finolex enjoys a dominant position in India’s agri pipe market due to its competitive edge in backward integration (PVC resin), established brand image and strong distribution network in rural market, said Haitong. While Ebitda is projected to remain relatively stable over FY19-FY22, the quality of profit could improve on rising contribution from product business, it said.

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