Buy Finolex Industries; target of Rs 190: ICICI Securities

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Finolex Industries (FNXP) reported robust pipe volume growth of 27.7% YoY in Q2FY27, driven by channel restocking and low base effect.
  • The company guides for EBITDA/kg of about INR 14-15 in FY27, with expected improvement in profitability due to consumption of high-cost inventory and stable PVC prices.
  • FNXP has a strong brand, wide distribution, and robust balance sheet, making it a leader in the agricultural pipe market.
  • The company is expanding in the plumbing segment, with a focus on CPVC and fittings products.

Thesis Validation Checklist

  • Watch for volume growth in Q4FY27, driven by agricultural demand, to validate the thesis.
  • Monitor EBITDA/kg margins, which are expected to remain in the range of INR 14-15 in FY27.
  • Track PVC price trends and their impact on profitability.
  • Observe the company's ability to maintain its market leadership position in the agricultural pipe segment and expand in the plumbing segment.