Finolex Industries Sees Bullish Outlook, Target Price Set at Rs 240 by Anand Rathi

Finolex Industries Delivers Mixed Q4FY26 Performance

Finolex Industries' latest quarterly results revealed a mixed performance in Q4FY26, with revenue falling short of analyst expectations. The company's revenue missed estimates by 8.9% due to a decline in pipe volume of 0.5% year-over-year (y/y) compared to the anticipated 10% growth. This decrease in revenue was largely attributed to weak demand for agricultural pipes.

However, the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) exceeded expectations by a significant 51.8%. This improvement was driven by a substantial 1,065 basis points (bps) year-over-year rise in margin to 25.3%, surpassing the estimated 15.2%. The main contributors to this increased margin were a Rs350-400 million mark-to-market (MTM) inventory gain and a better product mix.

Positive Outlook Ahead

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Looking forward, Finolex Industries is expected to experience an improvement in its business risk profile over the medium term. This is due to the increasing share of high-margin non-agricultural pipe volume, which rose from 32% in Q4FY25 to 34% in Q4FY26. As a result, analysts anticipate a 10% compound annual growth rate (CAGR) in the company's earnings per share (EPS) over the period of FY26-28e.

Stock Valuation and Recommendation

At its current market price (CMP), Finolex Industries trades at a price-to-earnings (P/E) ratio of 19.4/16x for FY27/28e EPS. This valuation is in line with the company's five-year pre-COVID average of 17.1x, which is considered reasonable. Consequently, the research report maintains a BUY rating on the stock with an unchanged target price (TP) of Rs240, valuing it at 20x P/E on FY28e.