Slowdown in export markets hurts performance

Company
11 Mar 2024
5 Min read 
  • Fine Organic Industries reported in-line EBITDA at INR924m in 3QFY24.
  •  Gross margin improved 660bp YoY to 41.8% due to a decline in raw material costs.
  •  Margin is expected to contract further in the coming quarters.
  •  All plants are running at optimal capacity except Patalganga-II.
  •  The company is awaiting physical land allotment in SEZ for expansion.
  •  The growth is not expected to start until 3QFY26.
  •  Management is considering establishing manufacturing facilities closer to customers in the US.
  •  Valuations are expensive with the stock trading at ~46x one-year forward P/E.
  •  The company is expected to have YoY earnings decline for the next three years.
  •  The stock has underperformed the Nifty-50/Sensex indices in the past year.
  •  The long-term prospects remain robust, but near to medium-term performance may be impacted.
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