Fine Organic Q4 Results Review - Strong Exports Recovery While Domestic Demand Resilient: Dolat Capital

Dolat Capital Report

Fine Organic Industries Ltd.’s Q4 FY24 revenue/Ebitda/profit after tax came at Rs 5.5 billion/Rs 1.4 billion/ Rs 1.1 billion and beat estimates by 10%/31%/35%, mainly due to stronger than expected recovery in exports (+38% QoQ), higher spreads and operating leverage benefits. Q4/FY24 exports revenue contribution stood at 55%/ 52%.

Fine Organic guided ambitious expansion plans, which could even involve raising debt (i.e. over and above cash on books of Rs 10.5 billion, which in itself is 1.7 times of current gross block). It is-

1. evaluating setting up of a considerable capacity outside India;

2. trying to expand its product range through acquisitions; and

3. waiting for allotment letter from government authorities in Maharashtra SEZ (expected shortly) to expand existing and new products.

We believe that capacity headroom available (albeit limited) will cater to recovery in export volumes, while upcoming SEZ expansion will aid long term growth needs.

Further, strong net cash balance sheet and healthy OCF of Rs 8 billion over FY25-26E will enable funding the capex programme.

We increase our FY25/26E EPS estimates by 4% and reiterate ‘Buy’ rating with revised target price of Rs 5450 (34 times FY26 earnings per share) from earlier Rs 5250.

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