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INVESTMENT INSIGHTS

Check Before You Invest : Finolex Industries Ltd

BSE: 500940 NSE: FINPIPE ISIN: INE183A01024
  |   Sector:  Chemicals & Fertilizers   |   Industry:  Plastic Products

Snapshot

Q.1 Which industry/sub-sector does Finolex Industries Ltd belong to?
Finolex Industries Ltd belongs to the Chemicals & Fertilizers sector, operating specifically within the Plastic Products segment.
Q.2 Is Finolex Industries Ltd a good quality company?
Finolex Industries Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Finolex Industries Ltd undervalued or overvalued?
Finolex Industries Ltd appears Somewhat Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 22.06 18.55
Price to Book 1.78 2.52
Price to Sales 2.65 2.84
EV to EBITDA 13.75 17.34
Q.4 Is Finolex Industries Ltd a good buy now?
Finolex Industries Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Finolex Industries Ltd?
Finolex Industries Ltd revenue growth is -4.1% for FY-2025, which is below its 5-year CAGR of 6.77%, indicating slower growth.

Q.2 Gross Profit margin of Finolex Industries Ltd?
Finolex Industries Ltd Gross profit margin which is the profit after deduction of direct costs, is 16.8% for FY-2025, which is in line with its 5-year median of 16.9%, indicating stable margins.

Q.3 Operating Profit Margin of Finolex Industries Ltd?
Finolex Industries Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 11.56% for FY-2025, which is below its 5-year median of 13.62% indicating decreasing margins.

Q.4 Net Profit Margin of Finolex Industries Ltd?
Finolex Industries Ltd Net Profit Margin is 18.78% for FY-2025, is in line with its 5-year median of 18.78%, indicating stable margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 16.8 16.9
Operating Profit Margin (%) 11.56 13.62
Net Profit Margin (%) 18.78 18.78

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Finolex Industries Ltd?
Finolex Industries Ltd Return on Asset is 10.99%, which is in line with its 5-year historical median of 10.99%, indicating stable asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Finolex Industries Ltd?
Finolex Industries Ltd Return on capital employed is 17.07% for FY-2025, which is in line with its 5-year historical median of 17.07%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 13.5%, indicating value creation.

Q.7 Return on Equity (ROE) of Finolex Industries Ltd?
Finolex Industries Ltd Return on equity is 13.51% for FY-2025, which is in line with its 5-year historical median of 13.51%, indicating the business is making similar use of its shareholders capital.

Q.8 Cash conversion cycle of Finolex Industries Ltd?
Finolex Industries Ltd Cash conversion cycle is 66 days, above its 5-year historical median of 61 days, indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 0.59 0.77
ROE (%) 13.51 13.51
ROCE (%) 17.07 17.07
Cash Conversion Cycle 66 days 61 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Finolex Industries Ltd?
Finolex Industries Ltd Debt-to-Equity ratio is 0.04, which is lower the industry average of 0.25, indicating lower debt levels in the industry.

Q.10 Debt to cash flow from operations of Finolex Industries Ltd?
Finolex Industries Ltd Debt to cash flow from operations is 0.58, which is at a healthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Finolex Industries Ltd?

Q.1 Promoter shareholding and pledge status of Finolex Industries Ltd?
Promoters hold 52.47% of the Finolex Industries Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Finolex Industries Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Finolex Industries Ltd vs industry peers?
Finolex Industries Ltd revenue CAGR is 6.77%, compared to the industry median CAGR of 4.71%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) -4.1 4.7
Gross Profit Growth (%) -4.9 14.3
Operating Profit Growth (%) -18.6 10.1
Net Profit Growth (%) 71 18.7
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 0.59 1.06
ROE (%) 13.51 5.91
ROCE (%) 17.07 8.75
Cash Conversion Cycle (days) 66.1 77

Valuation & price assessment

Q.1 Stock return of Finolex Industries Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 7.9% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 7.9% 1.6% -3.9% -13.6%
Q.2 Valuation ratios of Finolex Industries Ltd vs historical?
The current P/E ratio of 22.06 is higher than its historical median of 18.55, indicating that the stock is trading above its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 22.06 18.55 22.05
Price to Book 1.78 2.52 1.89
Price to Sales 2.65 2.84 1.33
EV to EBITDA 13.75 17.34 10.86

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