Ashish Kacholia portfolio: The Fineotex Chemical share price has shown a promising trend, starting from a low of ₹325 to ₹330 in June 2024 and steadily climbing to around ₹392 per share. This upward trajectory is expected to continue, with KR Choksey projecting a potential increase to ₹573 per share in the long-term, offering a significant 45 percent return to its shareholders.
Triggers for Fineotex Chemical share price
As a reason for being bullish on Fineotex Chemical shares, KR Choksey’s report said, “FCL has continued its upward trajectory with EBITDA margin coming in at 26% for FY24 vs 22% for FY23; Sales and PAT grew by 10% and 35% for FY24. For Q4FY24, FCL’s revenue increased 11% YoY (+11% QoQ) to INR 1,530 Mn (vs our estimate of INR 1,725 Mn). EBITDA increased 17% YoY (-5% QoQ) to INR 383 Mn (vs our estimate of INR 393 Mn, a miss of 2%). The miss in the estimates was primarily due to lower-than-expected sales growth, which was netted by higher margins.”
“EBITDA margins expanded 127 bps YoY (-412 bps QoQ) to 25%, which aligns with our estimates. * PAT came in at INR 301 Mn, increasing by 17% YoY (-8% QoQ), which aligns with our estimates. Volume expanded by 25% for the full year FY24. FCL has announced a dividend of INR 0.4/share, totalling a dividend of INR 1.60/share,” the brokerage said.
The brokerage added that FCL reported 26% EBITDA margins for FY24, compared to 22% in FY23. Margins improved due to lower cost of goods sold, with gross margins at 39% v/s 34%. On a full-year basis, this is the highest EBITDA margin posted by the company. Employee costs and Other Expenses were in line with FY23 in terms of percentage of sales.
Fineotex Chemical Limited is strategically positioned for growth, focusing on the production of sustainable chemicals for the cleaning and hygiene segment. The company is in talks with a major detergent manufacturer for a potential supply agreement, tapping into the vast market for detergent manufacturing. Additionally, the company is planning to enter the drilling chemicals segment, which is expected to be a high-growth area in the future.
Fineotex Chemical share price target
On the suggestion to the Indian stock market investors regarding Fineotex Chemical shares, KR Choksey said, “Currently, the stock is trading at 25x for FY25E and 19x FY26E EPS. We marginally increase our FY26E EPS estimate to INR 19.12 (previously INR 19.03) and assign a PE multiple of 30x to arrive at a target price of INR 573 (previously INR 571). Given the 62% upside from the current levels, we recommend a “BUY” rating on the stock.”
Ashish Kacholia shareholding
According to Fineotex Chemical Limited’s shareholding pattern for the January to March 2024 quarter, Ashish Kacholia owns 31,35,568 shares, or a 2.81 percent stake in the company.
Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 24 Jun 2024, 01:19 PM IST
