Finolex Industries Ltd - Result Update Q3FY20

16th February 2020 By Edelweiss

Finolex Industries Ltd. (FIL) reported a mixed set of numbers in the quarter with revenue falling short of estimates & EBITDA coming in ahead of estimates. Revenue was down 7.6% to INR 699cr, which is 14.2% below estimates. This was primarily because of an extended monsoon season with cyclones in West & South India (which are FIL’s key markets) which led to a fall in sales volume of both pipes & PVC resins. Sales de-growth was mainly led by the weakness in the resin business which de-grew by 15.7% on a y-o-y basis; with volumes de-growing by 11.5% & realisations down by 4.8%. Plastic pipes segment reported a moderate de-growth of 6.3% on a y-o-y basis on account of 10.8% de-growth in the volumes. Gross profits grew by ~2% y-o-y to INR 274cr with margins improving ~360 bps on a y-o-y basis to 39.2% from 35.6% in Q3FY19 primarily on account of an improvement in the PVC-EDC spread. EBITDA was flat to INR 138cr with blended margin coming in at 19.8% vs 18.4% in Q3FY19. PAT grew by 16.7% y-o-y to INR 91cr (in-line with estimates) with margins coming in at 12.9%, led by lower COGS & tax-outgo. Maintain BUY.

You may be interested to:

Buy Sell
Key Highlights
  • In Q3FY20, Revenue was down 7.6% to INR 699cr, which is 14.2% below estimates. This was primarily because of an extended monsoon season with cyclones in West & South India (which are FIL’s key markets) which led to a fall in sales volume of both pipes & PVC resins.
  • Volume in Pipe and Fittings segment saw a sharp decline of 10.8% y-o-y in Q3FY20; realisation however grew by 5% y-o-y, resulting in a 6.3% y-o-y sales growth in the segment. The Pipe and Fittings segment reported EBIT of INR 44cr, flat y-o-y, with margins expanding 45 bps to 7.9%.
  • The PVC resin segment reported sales de-growth of 15.7% YoY in Q3FY20 – volume was down 11.5% y-o-y while realisation dipped 4.8% y-o-y. FIL has reported a flat PVC resin segment EBIT at INR 82cr despite a sharp fall in revenues because of a ~10% increase in PVC/EDC spread.

Rate this article
+Add Comments
/s
Related articles