PL First Cut – Finolex Industries Ltd. - Q1FY24

PL First Cut – Finolex Industries Ltd. – Praveen Sahay – Research Analyst - Prabhudas Lilladher Pvt Ltd

Finolex Industries Ltd.

Q1FY24 Result First Cut

CMP: Rs181 | Mcap: Rs112bn | Accumulate

➡️ Revenues remained flat with 0.9 % de-growth YoY at Rs11.8bn (PLe: Rs10.9bn, 7.6% above) vs 5.5% above cons. estimates, due to PVC price correction.

➡️ Gross margins expanded by 100bps YoY to 33.8%. (PLe: 35%, cons. estimates: 36.8%)

➡️ EBITDA grew by 21.1% YoY to Rs1.5bn (PLe: Rs1.4bn, 5.7% above) vs 4.2% below cons. estimates. EBITDA margins expanded by 230bps YoY to 12.9% (PLe: 13.2% & Cons. est. 14.2%)

➡️ PBT grew by 26.2% YoY to Rs1.5bn (PLe: Rs1.4bn)

➡️ PAT grew by 7.7% YoY to Rs1.08bn (PLe: Rs 1.05bn, 3% above) vs 2.1% below Cons. est

✅ Pipe & fittings reported a revenue of Rs11.5bn up 2% YoY. P&F EBIT stood at Rs1.7bn up 197% YoY with an EBIT margin of 11%. The volume growth was 28% YoY at 92,181 MT above our expectation of 10.4% YoY volume growth. Reported realization of Rs 125 per Kg (down 20.4% YoY) vs PLe: Rs 123.5 per Kg.

🚫 PVC resin revenues de-grew by 54.2% to Rs3.6bn. PVC resin reported an EBIT of Rs31.2mn down 96% YoY with an EBIT margin of 0.9%. The volume declined by 27% YoY to 46,074 MT and external sales volume down by 41% YoY.

➡️ The Company displayed a strong balance sheet with a net free cash of Rs16.5bn

The stock is currently trading at 22x/19x FY24/FY25 earnings.