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  • Jun 28, 2021 - Finolex Industries Soars 15% After Reporting 5-Fold Jump in Profit

Finolex Industries Soars 15% After Reporting 5-Fold Jump in Profit podcast

Jun 28, 2021

Shares of Finolex Industries jumped as much as 15% on the BSE today after the company put up a strong show in the March quarter.

India's largest manufacturer of PVC pipes and fittings reported a surge of 433.7% in net profit to Rs 3 bn in the fourth quarter compared to Rs 557.1 m in the same quarter a year ago.

Finolex reported a rise of 62.5% in the total income to Rs 12.5 bn in the quarter ended on 31 March 2021, against Rs 7.7 bn in the same quarter previous year.

Earnings before interest, taxes, depreciation and ammortisation (EBITDA) for the quarter ended March 2021 was Rs 4.2 bn against Rs 1 bn during the previous year, up 305.3%.

Financial highlights for the year 2021

For the financial year 2020-21, the company reported a net profit of Rs 7.3 bn, 125% higher than the net profit of Rs 3.2 bn reported in the previous fiscal.

Revenue during the period surged 16% to Rs 34.6 bn for the year 2021 from Rs 29.8 bn in the last year.

EBITDA for the financial year 2021 stood at Rs 10.6 bn, up 122% from Rs 4.8 bn reported in the last year.

The stock has rewarded investors recently. The counter is up by 43% in the last three months, while it has surged over 89% in the last one year.

Key Financial Indicators

Particulars (Rs in bn) Q4FY21 Q4FY20 Growth FY21 FY20 Growth
Net Revenue 12.5 7.7 62.50% 34.6 29.8 16.00%
EBITDA 4.2 1 305.30% 10.6 4.8 122.00%
PAT 3 0.6 433.70% 7.3 3.2 124.60%
Data Source: Investor Presentation

Speaking on the performance, Mr Prakash P. Chhabria, Chairman, Finolex Industries said,

  • We are confident that our business model which is as strong and robust as the products and services we offer, will help us augment our growth.

    The company is confident of growing at an accelerated rate which is aligned with our overarching strategy to enhance value for all stakeholders.

    For our shareholders, we continue with our policy of a high dividend payout ratio.

    We stand with our employees - our biggest assets and are happy to state that we not only announced increments and promotions during the year, but also paid a special incentive for all employees as the company completes 40 years of successful operations.

    During this difficult time, Finolex Industries, in conjunction with our CSR Partner, Mukul Madhav Foundation, continues to support communities, in which we operate, with on-ground activities for Covid relief funded under its CSR initiatives.

Equity dividend

The board of directors have recommended a final dividend of Rs 2 per equity share and an additional one-time special dividend of Rs 2 per equity share for this financial year.

The company has a good dividend track report and has consistently declared dividends for the last 5 years.

The share split

Earlier this year in January 2021, Finolex Industries had announced a share split. This was received positively by the market.

This has increased the liquidity of shares and also allows more investments through the open market.

The company fixed Friday, 16 April 2021 as the record date for the sub-division (split) of one equity share of the face value of Rs 10 into five equity shares of the face value of Rs 2 each.

Equitymaster's view on Finolex Industries

We reached out to Aditya Vora, Research Analyst at Equitymaster, for his view on the company.

Here's what he has to say...

  • Companies in the pipes and fittings industry have benefitted from strong demand as well as the pricing over the past 2-3 quarters.

    Sharp growth in the agriculture pipe segment, where Finolex is the market leader due to 2 consecutive years of normal monsoon, has aided industry volume growth.

    The demand for the pipe industry is expected to be robust led by government's infrastructure push along with increase in farmers disposable income (demand driver for pipes in agriculture sector).

    However, there could be some pricing pressure on PVC going forward as the demand supply gap is narrowed.

How the stock markets reacted to Finolex Industries March quarter numbers today

Shares of Finolex Industries opened the day at Rs 189 on the BSE and Rs 187 on the NSE.

Its share price closed at Rs 182.4 (up 5%) on the BSE and Rs 182.3 (up 4.8%) on the NSE.

At its current price, it is trading at a P/E of 24.

The share touched its 52-week high of Rs 198.9 and 52-week low of Rs 87.8 on 28 June 2021 and 6 August 2020, respectively.

Over the last 30 days, the Finolex Industries share price is up 12.5%. Over the last one year, the company's share price is up 83.5%.

Note that the company's shares were split in the ratio of 1:5 on 16 April 2021.

About Finolex Industries

Finolex Industries, headquartered in Pune, is India's largest and only integrated manufacturer of PVC pipes and fittings.

It was formerly known as Finolex Pipes and was incorporated on 28 March 1981.

The company offer a wide range of PVC pipes and fittings suitable for diverse applications in agriculture, housing, and telecommunication.

They are having their manufacturing facilities in Pune and Ratnagiri in Maharashtra and Masar in Gujarat.

The company has a presence throughout the country, with a wide network of over 18,000 retail outlets ably supported by more than 850 dealers and sub-dealers.

The company is engaged in business of manufacturing PVC pipes & fittings, manufacturing of PVC resin and power generation.

It has two subsidiaries namely Finolex Plasson Industries and Pawas Port.

The company entered into a technical collaboration with UHDE, Germany, for licensing and technical know-how of Hoechst's process for manufacturing PVC resin and providing basic engineering.

For more details about the company, you can have a look at Finolex Industries factsheet and quarterly results on our website.

You can also compare Finolex Industries with its peers.

Finolex Industries vs Astral Poly Technik

Finolex Industries vs Prince Pipes and Fittings

Finolex Industries vs Responsive Industries

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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