FINPIPE - Finolex Industries Ltd. Share Price

Management of Finolex Industries provided an outlook for FY '26, indicating an internal target for double-digit growth, although they refrained from offering precise guidance due to uncertainties in the market, including fluctuations in PVC resin prices and government policies. They acknowledged the weak demand in the current scenario but reaffirmed a focus on margin recovery. The company reported a volume increase of 2% in the pipes and fittings segment in Q4 FY '25 and 4% for the full year, achieving 347,982 metric tons in total. In terms of financials, total income from operations for Q4 FY '25 was INR 1,172 crores, compared to INR 1,235 crores in Q4 FY '24, with EBITDA declining from INR 209 crores to INR 171 crores.

The net cash surplus as of March 31, 2025, stood at INR 2,535 crores, up from INR 1,820 crores last year, highlighting the company's robust financial position. Future capital expenditure is planned at around INR 125-150 crores, primarily for capacity increases, including the addition of 25,000 metric tons to bring total capacity to 470,000 metric tons for pipes and 50,000 metric tons for fittings. Management emphasized improving operational efficiency and managing costs as key initiatives to enhance margins, aiming for an EBITDA margin recovery to above 14%.

On the CPVC side, management indicated a 17% volume growth year-on-year and expected continued double-digit growth moving forward. They also anticipate the potential implementation of the anti-dumping duty and BIS regulations could further enhance pricing and profitability in the future. Overall, while management is cautiously optimistic about growth, they are concentrating on margin recovery and operational efficiencies amid a challenging demand environment.

Here are the major questions and their detailed answers from the Q&A section of the earnings transcript:

1. Question from Shravan Shah: "Could you provide your volume guidance for FY '26 and the growth expectation for the industry? How did CPVC perform in Q4 and FY '25?" Answer: "We don't provide exact projections, but we aim for double-digit growth internally. However, given market uncertainties like fluctuating PVC resin prices and government policies, we focus on margin recovery this year. CPVC saw a 17% year-on-year growth, with a 7% increase quarter-on-quarter."

2. Question from Pujan Shah: "Recent price increases seem due to strong demand. Do you anticipate ADD implementation will positively impact realization?" Answer: "The recent price uptick stems from improved demand, not from ADD. We expect the ADD to come into play soon, possibly in June, but its exact impact on prices will depend on market dynamics and government timelines. There's currently no hindrance to its implementation."

3. Question from Udit Gajiwala: "Can you elaborate on how much of the recent strong demand is due to restocking?" Answer: "The current demand is primarily pre-monsoon purchases. Buyers delayed earlier due to falling PVC prices but are now buying again as prices rise. This demand isn't about stocking inventory but about immediate needs."

4. Question from Sneha Talreja: "What is the forecasted growth rate of the PVC pipe industry over the next few years?" Answer: "We expect a CAGR of 8-10%. This trend should persist, given stable growth in both agri and non-agri segments. Our internal calculations are based on slightly above 10% growth."

5. Question from Ritesh Shah: "If anti-dumping duties (ADD) are implemented, what price stabilization can we expect?" Answer: "The expected price improvement could be between 5% to 10%. However, due to fluctuating import patterns, accurately pinpointing a specific figure is challenging. The industry anticipates a modest increase in prices post-ADD implementation."

If you'd like more details or other specific questions from the transcript, please let me know!