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About:
Fine Organics was incorporated in May 2002 & started operations in 2006 by setting up a manufacturing facility in Maharashtra.
It manufactures oleochemical additives for various end-user industries such as food, plastic, rubber, paint, ink, cosmetics, coatings.
About:
Fine Organics was incorporated in May 2002 & started operations in 2006 by setting up a manufacturing facility in Maharashtra.
It manufactures oleochemical additives for various end-user industries such as food, plastic, rubber, paint, ink, cosmetics, coatings.
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What is Oleochemical?
Oleochemicals are chemical compounds derived from natural fats & oils that can be used as RM in a variety of industries. It can be used as a substitute for petrol-based products known as petrochemicals.
It’s demand goes up when crude prices go up.
What is Oleochemical?
Oleochemicals are chemical compounds derived from natural fats & oils that can be used as RM in a variety of industries. It can be used as a substitute for petrol-based products known as petrochemicals.
It’s demand goes up when crude prices go up.
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Trend in Oleochemical:
As non-renewable resources become depleted, oleochemicals are on the rise as sustainable substitutes.
Factors fuelling it’s growth:
• Availability of raw materials
• High demand from consumers
• Growth of the green chemicals market
Trend in Oleochemical:
As non-renewable resources become depleted, oleochemicals are on the rise as sustainable substitutes.
Factors fuelling it’s growth:
• Availability of raw materials
• High demand from consumers
• Growth of the green chemicals market
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Fine Organics Customer base:
• Presence in 75+ countries
• Offers around 450+ products
• String distribution channel with 180+ distributors
• 800+ direct customers
Fine Organics Customer base:
• Presence in 75+ countries
• Offers around 450+ products
• String distribution channel with 180+ distributors
• 800+ direct customers
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It’s Product portfolio:
• Food Additives
• Polymer Additives
• Additives for coatings
• Emollients for Cosmetics
• Feed Nutrition Additives
• Specialty Additives
It’s Product portfolio:
• Food Additives
• Polymer Additives
• Additives for coatings
• Emollients for Cosmetics
• Feed Nutrition Additives
• Specialty Additives
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Main barriers to entry:
• High switching cost for Customers
• Limited Players
• Highly Regulated Sector
• Complex technology making it difficult to establish an in house manufacturing facility .
Main barriers to entry:
• High switching cost for Customers
• Limited Players
• Highly Regulated Sector
• Complex technology making it difficult to establish an in house manufacturing facility .
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Strengths:
• Expert Promoters:
Fine Organic Industries Limited (FOIL) is a part of the Fine Organics Group, founded in 1970 by Mr. Ramesh Shah, a Mumbai- based businessman with experience in chemical trading, and Mr. Prakash Kamat, a skilled chemical technocrat.
Strengths:
• Expert Promoters:
Fine Organic Industries Limited (FOIL) is a part of the Fine Organics Group, founded in 1970 by Mr. Ramesh Shah, a Mumbai- based businessman with experience in chemical trading, and Mr. Prakash Kamat, a skilled chemical technocrat.
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• Strong in-house R&D facilities -
FOIL has an in-house R&D centre with strong capabilities. The company’s in-house product innovations, product applications and engineering improvements helps it cater to the market’s needs and gain an edge over other global players.
• Strong in-house R&D facilities -
FOIL has an in-house R&D centre with strong capabilities. The company’s in-house product innovations, product applications and engineering improvements helps it cater to the market’s needs and gain an edge over other global players.
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• Low customer concentration risk-
The company has a well-diversified and reputed customer base in both the petrochemical and food sectors. As indicated by the company’s management, it’s sales are diversified with no customer accounting for more than 5% of the total.
• Low customer concentration risk-
The company has a well-diversified and reputed customer base in both the petrochemical and food sectors. As indicated by the company’s management, it’s sales are diversified with no customer accounting for more than 5% of the total.
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• Long-term relationships with suppliers –
About 65% of the company’s raw material is procured from the domestic market. FOIL has a healthy relationship with its suppliers which ensures uninterrupted supply of raw materials & mitigates the impact of supply risks.
• Long-term relationships with suppliers –
About 65% of the company’s raw material is procured from the domestic market. FOIL has a healthy relationship with its suppliers which ensures uninterrupted supply of raw materials & mitigates the impact of supply risks.
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• Financial Profile:
FOIL, on a consolidated basis, reported an operating income of ₹1,867.3crore in FY22, a growth of 66% over the FY21 levels.
It’s EBIT Margin also saw an improvement from 14.8% to 19% YoY.
It’s borrowings reduced from 56.7cr to 25.1cr YoY.
• Financial Profile:
FOIL, on a consolidated basis, reported an operating income of ₹1,867.3crore in FY22, a growth of 66% over the FY21 levels.
It’s EBIT Margin also saw an improvement from 14.8% to 19% YoY.
It’s borrowings reduced from 56.7cr to 25.1cr YoY.
(12/16)
Challenges:
RM price fluctuation –
FOILs key raw materials are vegetable oils and their derivatives, whose prices have been volatile.
FOIL enters into short- term contracts with customers at spot rates, which mitigates the RM price fluctuation risk significantly.
Challenges:
RM price fluctuation –
FOILs key raw materials are vegetable oils and their derivatives, whose prices have been volatile.
FOIL enters into short- term contracts with customers at spot rates, which mitigates the RM price fluctuation risk significantly.
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Profitability exposed to adverse fluctuation in forex rates:
55-60% of its sales come from exports, while it imports ~30-35% of its total RM.
However, the risk is mitigated by the natural hedge from imports, forex hedging of imports & exports & foreign debt repayment
Profitability exposed to adverse fluctuation in forex rates:
55-60% of its sales come from exports, while it imports ~30-35% of its total RM.
However, the risk is mitigated by the natural hedge from imports, forex hedging of imports & exports & foreign debt repayment
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• Commanding Expensive Valuation:
The valuations of FOIL is very expensive compared to its peers.
It is currently trading at a P/E of 59.3x while SRF is trading at 35.9x & Gujarat Fluoroch is trading at 37.4x
The Q4 numbers have given a huge boost to its share price.
• Commanding Expensive Valuation:
The valuations of FOIL is very expensive compared to its peers.
It is currently trading at a P/E of 59.3x while SRF is trading at 35.9x & Gujarat Fluoroch is trading at 37.4x
The Q4 numbers have given a huge boost to its share price.
(15/16)
Numbers & Ratios:
• 8 year Revenue CAGR: 18%
• EBITDA margin 8 year CAGR: 18%
• PAT Margin 8 year CAGD : 25%
• Net Debt to Equity: -0.18x
• ROCE : 31.80%
• RoNW : 27.09%
• PAT Margin : 13.8%
• EPS : 84.7 vs 39.3 YoY
Numbers & Ratios:
• 8 year Revenue CAGR: 18%
• EBITDA margin 8 year CAGR: 18%
• PAT Margin 8 year CAGD : 25%
• Net Debt to Equity: -0.18x
• ROCE : 31.80%
• RoNW : 27.09%
• PAT Margin : 13.8%
• EPS : 84.7 vs 39.3 YoY
(16/16)
FOIL is comfortably able to pass on rise in RM prices along with high freight cost to its customers. Which is reflected in its Margin numbers.
However, valuations looks expensive especially in the current market scenario.
@caniravkaria @kuttrapali26 @aparanjape
FOIL is comfortably able to pass on rise in RM prices along with high freight cost to its customers. Which is reflected in its Margin numbers.
However, valuations looks expensive especially in the current market scenario.
@caniravkaria @kuttrapali26 @aparanjape
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