Finolex Industries Limited, a leading player in the PVC pipes and fittings industry, recently held its earnings conference call for the third quarter of fiscal year 2025 (Q3 FY 2025). The call, moderated by ICICI Securities, featured key insights from the company’s management, including Managing Director Mr. Saurabh Dhanorkar and CFO Mr. Chandan Verma. The discussion revolved around the company’s financial performance, demand trends, margin dynamics, expansion plans, and strategic initiatives amid a challenging market environment.
This article provides a concise summary of the earnings call, capturing the critical takeaways for investors and stakeholders interested in Finolex Industries’ performance and outlook.
Finolex Industries Q3 FY 2025 Financial Highlights
| Metric | Q3 FY 2025 | Q3 FY 2024 | YoY Change | Comments |
|---|---|---|---|---|
| Total Revenue (INR Cr) | 1,001 | 1,019 | -1.8% | Slight decline due to weaker realizations. |
| EBITDA (INR Cr) | 83 | 120 | -30.8% | Margin pressure from discounting. |
| EBITDA Margin (%) | 8.3% | 11.8% | -350 bps | Competitive pricing impacted profitability. |
| PAT (INR Cr) | 70.96 | 89.21 | -20.5% | Lower EBITDA flow-through. |
| Net Cash Surplus (INR Cr) | 2,300 | 1,570 | +46.5% | Strong liquidity position. |
Segmental Performance (Q3 FY 2025 vs. Q3 FY 2024)
| Segment | Revenue (INR Cr) | Volume (MT) | EBIT (INR Cr) | Key Trends |
|---|---|---|---|---|
| Pipes & Fittings | 992 (flat YoY) | 85,767 (+5.5%) | 32.13 (vs. 74.24) | Volume growth offset by price cuts. |
| PVC Resin | 413 (+28.6%) | 56,830 (+30%) | 39.17 (vs. 30.88) | Higher volumes and better spreads. |
Highlights of Question and Answer Session
So, in 9 months, we have broadly done 3.9% volume growth. So how one can look at the fourth quarter? And if you can also help us in terms of the next year or maybe a couple of years, particularly previously, we are looking at 10%, 15% kind of a growth. So how one can look at?
- this year so far in the 9 months has not been as good as we expected at the beginning of the year.
- Overall, the industry has not really performed well.
- closing the year definitely with a growth, but more likely a single-digit growth than a doubledigit growth.
- The demand has definitely picked up. Compared to January, February is doing well.
- But overall, to achieve more than 10% growth as we estimated at the beginning of the year, to be very honest, looks like farfetched.
- Talking about next year, again, we are enthused by the recent schemes announced by the Government of India in the last budget, the Swamih scheme for affordable housing, Jal Jeevan Mission extended to 2028, Dhan-Dhanya Mission which will benefit more than 1.7 crores farmers.
But looking at the January and February, is it fair that we can do a 5% to 10% kind of a growth in the fourth quarter?
yes
On the margin front, how one can look at because now 2 aspects to that. One is obviously the anti-dumping duty. So, if you can help, is there any kind of a timeline that in next by end of February, can we see that coming in?
And if not, then how do we see the prices on the Q-o-Q front? And then ultimately, how one can look at in terms of the EBITDA margin front?
Factors Influencing PVC Resin Prices-
- One, the anti-dumping duty
- two, the BIS quality mandate.
BIS quality mandate-
- has been postponed to June ’25.
anti-dumping duty-
- we have been saying that for the last 2-3 months.
- It can happen in the next 15 days. but you can’t be very sure.
- So, if that doesn’t come through, we are looking at more or less flattish PVC prices.
I don’t think there is any more room for the prices to fall further. If there is anti-dumping duty, yes, then there will be an immediate increase.
But if there is stability for a couple of months, then yes, the demand will bounce back. So, either way, I think going ahead, I don’t know, January, February is too short a period to make any comments. But if you look at the next 6 months, then yes, we definitely see a bounce in demand.
In that scenario, in terms of the margin level, whether at an EBITDA level, is it fair that we can have 11% plus kind of a margin in FY ’26?
we have not been giving absolute numbers as a guideline.
The margins this quarter, particularly in the last quarter, dipped a bit because of competition, everybody did a bit of discounting to push out the stocks.
Now that the inventory levels are not very high, despite what happens to the PVC resin, we see the pipe and fitting prices moving up marginally because there is no pressure on discount and all that.
yes, we see improvement in margins going ahead.
on the expansion front. So 40,000, 50,000 tons we were suppose to add by March ’25. And for next year, I think the next expansion, we were looking at greenfield, I think 1 lakh plus kind of a number. So, if you can update on that front?
Out of this 50,000 tons expansion at the current locations, about 45% of that, the machines have already arrived, but we won’t complete the entire 50,000 by Q4 ’25.
So about 25,000 tons roughly will come in this quarter, Q4 FY ’25 and the remaining 25,000 will go into Q1 FY ’26.
The greenfield capacity is still on hold because currently, we are still optimizing whatever we have, getting rid of the old machines and increasing the capacity at the existing locations because we see a lot of value in that instead of going for a greenfield capex, because return on investment at existing locations is much, much better than going for greenfield.
But I don’t think you are going to hear any announcement at least in the next 6 months about a greenfield project.
in 9 months, how much capex we have done and for fourth quarter, how much expense? And next year, given that the greenfield is not there, let’s say, so currently, how one can look at the capex?
for 9 months,we will end up slightly above INR100 crores, including maintenance capex.
And next year would be more or less similar, nothing big.
On the land bank sale. Are we done with all of it? Or is a part of it still left? And what is it that we have realized so far?
Part of it is still left. We don’t intend to sell that immediate. So overall, we had about 70-odd acres, out of which now 10 acres is still left. We are done with the remaining. This year, we have a gain of INR417 crores and odd.
if you can highlight what is our current capacity. I think it’s around 470 pipes and fittings. If you can bifurcate it in fittings and how should we see this number of 470 going forward, say, year-end and next year?
So current 470,000 MT per annum breakup is 420,000 MT per annum for pipes and 50,000 MT per annum is for fitting.
we are going to add 50,000 more capacity, partly in Q4 of this year and Q1 of the next year.So overall basis, we will be at from 470,000 to 520,000.
Firstly, on the demand front, we’ve seen start of agri season. How is the demand both the plumbing side and on the agri side? And secondly, we have seen a fall of about INR3-odd in terms of PVC prices. Are you looking at another price drop? Or how is the PVC price scenario at this point of time?
January performance was below expectations across both agri and plumbing segments.
Early February (last 8-10 days) showed demand improvement, helped by lean channel inventories.
While the company hasn’t reduced prices yet, some pipe & fittings price cuts are expected to match competitive pressures.
Management indicates price reductions may be implemented soon, though the market isn’t overly aggressive currently.
what is our agri/non-agri mix for the quarter and 9 months?
So, for agri, during the current quarter, our mix is 67-33, whereas the corresponding quarter of the last year, it was 68 versus 32 on a quarter-on-quarter basis. And on a 9-month basis, current 9 months is 66-34 and whereas in the last year’s 9 months, it was 63 versus 32.