Choice Equity Broking has given Buy recommendation for Fineotex Chemical with a target price of Rs. 105 in its research report issued on Mar 31, 2021
Choice Equity Broking’s report on Fineotex Chemical
Fineotex Chemical Ltd. (FCL) is one of the leading specialty chemical manufacturer in India. Its products are widely used in textile sector, water treatment, leather, construction and paint sector. The company has manufacturing facilities in India and Malaysia with a combined production capacity of 43,000 tonnes per annum and with over 450 products in the portfolio. FCL’s products find application across the entire textile value chain spanning from pre-treatment, dyeing, printing and finishing. It has long track record in chemical industry with a presence in key international textile hubs like Bangladesh, Indonesia, Malaysia, Thailand, Vietnam, Singapore, Brazil, USA and Germany. As on FY20, around 94% of the revenue is derived from textile chemicals. On consolidated basis, it’s overseas business accounted to 52% to the total revenue.
At CMP of Rs. 61.5, FCL is trading at TTM PE of 27.2x against its peer average of 33.6x. We have a positive outlook on the stock considering the synergies of R&D expertise coupled with its leading position in textile speciality chemicals market, capacity expansion and positive industry outlook. We assign a P/E multiple of 22x to its FY23E EPS to arrive at a target price of Rs. 105 per share. Thus we assign a “BUY” rating to the stock.