Finolex Industries：农业/农村领域的投资机会；第四季度表现强劲；买入

2026E2027E46,209.051,647.0-48,802.055,725.02.8x2.5x2.8x2.5x 2028E58,195.0-2.2x2.2x Sonali Salgaonkar * | Equity Analyst91 2242246128 | ssalgaonkar@jefferies.comSaurabh Kulkarni * | Equity Associate+91 22 4224 6323 | skulkarni5@jefferies.comRecent Research Notes:ASTRA:In-Line Quarter;PVC Trend aMonitorablePIDI: Healthy Volume Growth Yet AgainKJC: Weak Quarter; Plywood BusinessClosureSI:Weak Q4;But Outlook AppearsPositive The Long View: Finolex IndustriesInvestment Thesis / Where We DifferBackward integration into PVC resin alleviates dependence on importsRobust franchise in PVC pipes, especially agricultureManagement remains committed to increased share of non-agri salesForay into higher-margin CPVC pipes and fittings (since FY18) couldenhance profits as segment ramps upCapacity additions and distribution in place to cater to incremental demandBase Case,INR275, +32%Over FY26-28E, Pipes revenue at +12% CAGRPVC resin revenue to increase at +12% CAGROverall revenue / adj EPS to clock CAGR of+12%/21% over FY26-28E.We expect operating margins to recover to 16%by FY27E, led by optimizing product mix andhigher Pipes volumes (operating leverage)PT of Rs 275, target PE at 23x on Mar27 EPS, ata slight premium to hist 5-yr avg PE. Valuationmultiple is at steep discount to peers ASTRA andSI.Sustainability MattersTop Material Issue(s):In our assessment, the material ESG issues for Chemical sector in India couldbe1)Product design and lifecycle management2)GHG emissions3)Employee health and safety4)Waste, Water, biodiversity, air quality and 5) Business ethics.Company Target(s):FNXP’s ESG Roadmap is as follows:1)Identifying the list of all relevant ESGissues2)Stakeholder engagement and shortlisting of identified relevant issues to get material3)Strategy formulation around identified issues along with long-term/interim targets4)Monitoringprogress around goals and targets by identifying relevant indicators5)Reporting and communicatingperformance using ESG report/BRSRQs to Mgmt: 1)What are the key steps to reduce carbon emission? Substitution of high carbonfuels with low carbon fuels2)What are the key steps in the direction of increasing renewable energysources?3)Steps towards effective waste-water management?Please see important disclosure information on pages 9 - 14 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Upside Scenario,INR300, +44%Higher traction in volumes, realizations in pipes& fittings and PVC resinImprovingPVC/EDC spreads,boosting resinmarginsRevival in volumes from construction activityHigher volumes in agri-pipesPT of Rs 300 (premium to base case multiple) Risk/Reward - 12 Month View40035030025020015010020252024Downside Scenario,INR150, -28%Lower traction in volumes, realizations in pipes &fittings and PVC resin businessSlowdownin construction activity to impactvolumesLower volumes from agri-pipesLower PVC/EDC spreads to hit resin marginsLowercaptive consumption of resin,higherdependence on importsPT of Rs 150 (discount to base case multiple)CatalystsRamp-up in CPVC products portfolioEnhanced focus on the higher-margin plumbingsegment and fittingsGovernment’s initiatives to boost housing (esp.affordable), farm income, sanitation projects etc.Improvement in capacity utilization to result inbetter operating leverage 2 Exhibit 2 - FNXP IN: Standalone Quarterly Performance Snapshot.(Rs mn)Net salesRaw material costsEmployee costsOther expensesTotal expenditureEBITDADepreciationEBITOther non-operating incomeInterest expensePBTLess: TaxAdjusted PATExtraordinary itemsReported PATRep. EPS (in Rs)Gross Margin (%)EBITDA Margin (%)Adj. PAT margin (%)Employee costs as % to net salesOther expenses as % to net salesSource: Jefferies, company dataExhibit 3 - Revenue Split - Before Intersegmental.(Rs mn)PVC ResinPVC Pipes & FittingsTotal revenueSource: Jefferies, company dataExhibit 4 - Segmental EBIT Margins.EBIT margin (%)PVC ResinPVC Pipes & FittingsOverall EBIT MarginSource: Jefferies, company dataExhibit 5 - Volume Split.PVC Resin (MT)PVC Pipes & Fittings (MT)Total VolumesSource: Jefferies, company dataPlease see important disclosure information on pages 9 - 14 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Quarterly ExhibitsExhibit 6 - Revenue and Growth Trend.02468101214161820Q1FY24Q2FY24 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 Q4FY25PVC Resin(Rs. bn)Source: Jefferies, Company dataExhibit 8 - Gross Profit and Margin Trend.02468Q1FY24Q2FY24 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 Q4FY25Gross Profit(Rs. bn)Source: Jefferies, company dataExhibit 10 - PAT and Margin Trend.06001,2001,800Q1FY24Q2FY24Q3FY24Q4FY24Q1FY25Q2FY25Q3FY25Q4FY25Adj. PAT(Rs. mn)Source: Jefferies, company dataPlease see important disclosure information on pages 9 - 14 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. PVC Pipes & Fittings Exhibit 12 - Pipes and Fittings Sales