1
Please refer to important disclosures at the end of this report
1
1
Finolex Industries Ltd (FIL) is the largest PVC pipes manufacturer in India (~28%
organized market share). The company generates 40% of its revenues from west
India, 30% from south India, 20% from north India and 10% from east India.
Going forward, it plans to expand in the north-east region, which will further
boost its revenues as it enjoys strong brand equity in PVC pipes business.
Management highlighted that volume to pick up from capacity addition in PVC
pipe & fittings and from CPVC segment. The spreads between PVC and EDC has
been US$ 737 per MT in Q2FY18 and has currently corrected to US$ 700 per
MT. The increase in SKUs (~1500 from 1400 at start of FY17), dealer network
(added 100 in FY17 over base of ~800) & sub-dealer network (reach to
18,000), increasing high margin products (currently 150 SKUs of CPVC which is
continually increasing) and increase in internal consumption of PVC resin (at 80%
internal consumption in H1FY18), will drive the sales and improve the margins in
coming years. It has reported healthy bottom line growth of 41% over FY2012-
17 and is also a debt free company. FIL’s cash flows has improved from
`154.54cr in FY12 to `234.15cr in FY17 and is currently maintaining an
average dividend payout of ~50% since 2012. The company has a ROE of
12.73% and it is currently trading at a valuation PE of 25.71x of TTM earnings.
Hence BUY.
BUY
CMP `630
52 Week High / Low
752.8/405
Avg. Daily Volume
7,686
Plastic Products
Market Cap (` cr)
8,029
1
BSE Sensex
33,487
Nifty
10,325
Face Value (`)
Reuters Code
FINX.NS
FNXP:IN
0.8
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Finolex Industries Ltd
Others | Plastic Products
Nov 28, 2017
2
Finolex Industries Ltd |Plastic Products
Oct 13, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Finolex Industries
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)