Target: ₹5,200

CMP: ₹4,308.50

Fine Organic’s (Fine Org) Q4FY25 performance was in-line with street estimates. It is operating at optimal utilisations with limited volume growth headroom till new capex comes onstream; except the Patalganga facility, which will be absorbed by H1FY27 and minor contribution from the Badlapur facility, which resumed operations recently (shut since January 2024). High existing capacity utilisation underscores healthy demand and strong customer retention; upcoming SEZ and US expansions will enable onboarding of new large accounts. While volume growth will remain muted in the interim, this positions the company well for a sharp scale-up once new capacities are operational. We resume coverage on the stock with a Buy rating and a TP of ₹5,200 (33x FY27e EPS).

Consolidated revenue came in at ₹610 crore (+11 per cent y-oy/+18 per cent q-o-q), led by higher volumes across exports and domestic market. Gross margin came at 39.6 per cent (-451 bps y-o-y/+16 bps q-o-q) due to increase in input costs (vegetable oil based); incremental costs are being passed on in non-contracted volumes and will be undertaken gradually in contracted volumes. EBITDA at ₹120 crore (-17 per cent y-o-y/+21 per cent q-o-q) was impacted by higher opex (+21 per cent y-o-y/+18 per cent q-o-q) in addition to lower gross margin. PAT came at ₹97.1 crore (-15 per cent YoY/ +17 per cent q-o-q).

While FY25 was relatively muted in terms of bottom-line growth due to cost pressures, the company is setting the stage for a multi-year growth cycle through its large capex in export-focused SEZ and US markets. Limited near-term volume upside, but strong strategic initiatives offer earnings re-rating potential from FY27E as new capacities come onstream and margin pressure subsides. The expansions will largely be self-funded, given about ₹1,200 crore in cash on the books and about ₹900 crore in cash generation expected over FY26-27E.

Published on May 13, 2025