Anand Rathi Research
Target: ₹240
CMP: ₹
Finolex Industries reported a mixed performance in Q4 FY26, with revenues falling short of estimates by 8.9% due to a decline in pipe volume of 0.5% year-on-year, compared to an anticipated growth rate of 10%. This decline primarily stems from weak demand for agricultural pipes. The company appears to have lost market share, contrasting with the positive volume growth seen among its key competitors.
Agricultural pipe volumes decreased by 3%, while non-agricultural pipe volumes increased by 6%. Nonetheless, Finolex Industries’ EBITDA significantly surpassed estimates, exceeding projections by 51.8%. This surge was attributed to a substantial rise in margins by 1,065 basis points, reaching 25.3% compared to the estimated 15.2%, supported by a marked-to-market inventory gain estimated at ₹35-40 crore and an improved product mix.
The management has forecasted high-single to low-double-digit volume growth for FY27, with EBITDA margins expected to be below 15%. The company aims to increase the share of non-agricultural pipe sales to 50% within the next four to five years, up from 37% in FY26.
For FY27, Finolex Industries has indicated that it does not plan any major capital expenditures, believing that its current production capacity of 520 kilotonnes per annum will suffice for its near-term growth needs. The budgeted capex is projected at ₹100-200 crore for FY27.
In light of the soft volume performance in Q4 FY26, earnings per share (EPS) estimates have been slightly adjusted downward by 4.6% for FY27 and 0.1% for FY28. The stock is rated as a BUY, maintaining a target price of ₹240, based on an unchanged valuation multiple of 20 times FY27/28 estimated EPS.
Published on May 29, 2026
