Finolex Industries: Accumulate, Target Price Rs 207: Prabhudas Lilladher

Prabhudas Lilladher Downgrades Finolex Industries to 'Accumulate' Rating

In a recent research report, Prabhudas Lilladher has revised its outlook on Finolex Industries, citing weak agri demand in the fourth quarter of FY26. The company's Poly and Fibre (P&F) volume remained flat year-over-year (YoY) in Q4FY26, primarily due to farmers delaying purchases amid PVC price volatility and expectations of further price corrections.

Finolex Industries has guided for higher single-digit to low double-digit volume growth in the P&F segment for FY27, while targeting earnings before interest, tax, depreciation, and amortization (EBITDA) margins at sub-15% levels amid continued volatility in raw material prices. The company reported an inventory gain of INR 350-400mn in Q4FY26, which can be attributed to its increased inventory position of 91 days (up 22 days YoY, calculated on sales) at the end of Mar'26. This strategic move was made in anticipation of strong agri-pipe demand in Q1FY27, as well as to mitigate the impact of volatility in raw material prices.

Prabhudas Lilladher has estimated revenue, EBITDA, and adjusted profit after tax (PAT) compound annual growth rate (CAGR) of 11.9%, 1.9%, and 4.7% respectively for FY26-28E, with P&F volume CAGR of 8.3% and EBITDA margin of 13.7% by FY28E.

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Key Changes to Earnings Estimates and Rating

Prabhudas Lilladher has tweaked its earnings estimates for FY27 and FY28E and downgraded the rating to 'Accumulate' with a revised target price of Rs 207 (earlier Rs 203). The revised target price is based on 18x Mar'28 earnings plus a valued stake in the group listed entity Finolex Cables at 50% discount to consensus target market value.