FINPIPENSENovember 14, 2025

Finolex Industries Limited

6,606words
164turns
16analyst exchanges
1executives
Management on call
Arun Baid
ICICI SECURITIES LIMITED
Key numbers — 40 extracted
6%
f the highlights are as under, for quarter 2 FY '26, the volume as I mentioned decreased by about 6% to 65,336 metric tons against the 69,341 metric tons during the same period last year. Total in
4%
tons during the same period last year. Total income from operations has improved slightly about 4% to INR859 crores for the quarter as against INR828 crores for the same quarter previous year. EBI
INR859 crore
during the same period last year. Total income from operations has improved slightly about 4% to INR859 crores for the quarter as against INR828 crores for the same quarter previous year. EBITDA, we have see
INR828 crore
income from operations has improved slightly about 4% to INR859 crores for the quarter as against INR828 crores for the same quarter previous year. EBITDA, we have seen a significant improvement in our EBITDA
INR130 crore
s year. EBITDA, we have seen a significant improvement in our EBITDA margin, which has gone up to INR130 crores against the last year of -- last year same quarter of INR11 crores. PAT also has gone up to INR1
INR11 crore
margin, which has gone up to INR130 crores against the last year of -- last year same quarter of INR11 crores. PAT also has gone up to INR119 crores against the INR51 crores in the same quarter last year.
INR119 crore
rores against the last year of -- last year same quarter of INR11 crores. PAT also has gone up to INR119 crores against the INR51 crores in the same quarter last year. So the highlights for the first half,
INR51 crore
r of -- last year same quarter of INR11 crores. PAT also has gone up to INR119 crores against the INR51 crores in the same quarter last year. So the highlights for the first half, that overall volume in the
2%
o the highlights for the first half, that overall volume in the first half has been down by about 2% to 157,645 metric tons against nearly 159,961 metric tons in H1 of the previous year. Total incom
INR1,902 crore
metric tons in H1 of the previous year. Total income from the operations is also slightly down to INR1,902 crores against INR1,969 crores last year. EBITDA has improved
INR1,969 crore
previous year. Total income from the operations is also slightly down to INR1,902 crores against INR1,969 crores last year. EBITDA has improved by about 3% in the firs
3%
INR1,969 crores last year. EBITDA has improved by about 3% in the first half to INR224 crores as against INR217 crores of last year. Correspondingly, the PA
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Guidance — 20 items
Shravan Shah
qa
“Because if our agri share goes up, realization again will be a dip, and that obviously will have an impact on the EBITDA margin.”
Udipt Agarwal
qa
“And as we move into the quarter 3, there will be demand for this will come back, agri.”
Shravan Shah
qa
“And maybe if you can help us going forward also because we are looking at double-digit kind of growth, given now the PVC prices are kind of bottomed out and maybe ADD will help there also?”
Udipt Agarwal
qa
“The second part -- or the first part of your question, which was outlook on the growth, so yes, we -- I think -- it would be fair to say that we will -- we are now looking at mid-single-digit numbers in terms of our growth forecast for the year.”
Shravan Shah
qa
“But going forward from FY '27 onwards, we can see a kind of a double-digit kind of a growth that's kind of sustainable?”
Shravan Shah
qa
“Sir, I hope we should maintaine a double-digit growth and maybe going forward under 15% kind of EBITDA margin.”
Udipt Agarwal
qa
“So on a year-on-year full year basis, we would like to maintain a higher digit -- higher digit EBITDA will be achievable.”
Udipt Agarwal
qa
“But that is something which we call as our project sales, and we see that there is a momentum in that area and that also drives our non-agri sales.”
Ritesh Shah
qa
“And third, any specific changes at the company level that you aspire for, say, over the next 12 to 18 months, 12 to 24 months?”
Chandan Verma
qa
“And once that materializes, that goes for the multiple level of approval, including Board, then we'll able to conclude how -- what we will be able to utilize and by what timeline.”
Risks & concerns — 9 flagged
So on an overall basis, there is a 6% decline, but this is largely contributed by the agri decline, but non-agri, we have registered a volume growth of 7%.
— Chandan Verma
Despite volatile PVC in Q2 and you explained the reasons for that.
— Sonali
But I think on an overall basis, we don't see a decline in the demand overall.
— Udipt Agarwal
So it's very difficult to really put a finger on how much is coming from infra, how much from real estate segment.
— Udipt Agarwal
So considering this, it's very difficult to give what the market share that we are having.
— Chandan Verma
Ritesh, it is very difficult to put any timeline because it gave -- because there are -- depends up on what kind of our planning is going on in our cash that is there on the table.
— Chandan Verma
So it's -- as we said earlier also, it's difficult to segregate and put a finger on how much is coming from the infra segment and how much coming from real estate in non-agri business because most of our business is through channel partners.
— Udipt Agarwal
So during the life cycle of the backward integration, it would be difficult to justify returns.
— Udipt Agarwal
Difficult to say, it all depends on how the international players international suppliers into India decide to run their petrochemical complexes and want to price their product.
— Udipt Agarwal
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Q&A — 16 exchanges
Q
Sir, first off, I wanted to understand this change in inventory which is a INR172-odd crores negative, and that's why there is a significant improvement in the EBITDA and EBITDA margin. So a couple of things to understand here. First, how much is inventory gain in this quarter, how much one can look at to reverse in the third quarter? And if we exclude this, then what kind of margin -- EBITDA margin one can now look at it from third quarter onwards?
Chandan Verma
So how we look at our numbers. So if you compare our gross margin, so looking into the inventory number directly, inventory changes will not give you the right perspective. How we should look into the gross margin and what is there in the current quarter and what is there in the earlier quarter? So if I give you the perspective, our gross margin during the current quarter stood at 42%, whereas the same number of the corresponding quarter of the previous year is 30%, number one. Number two, having said that, this inventory gain and loss as such is not directly in the quarter, but the number you
Q
Some bookkeeping questions. Firstly, what was your PVC to EDC spread in Q2 FY '26 versus Q2 FY '25? And also Q1, if you could give us?
Udipt Agarwal
PVC to EDC Q1, it was $522, and current quarter, it is $532 -- $535, sorry, my bad. $535, which is PVC to EDC. Another one is what you have been asking PVC to... VCM, Yes. Yes. $151 v $187. Understood, sir. And what is the PVC to EDC spread right now as we speak? Right now, it's roughly around $535. So almost close to the average of Q2? Understood. Secondly, what were your average prices for PVC and EDC and VCM during this quarter? That detail, actually, we do not disclose. That is the actual -- at what rate we have structured our VCM and what is the procured rate because it is two, three sect
Q
My first question is…
Management
Q
Is it fine?
Udipt Agarwal
Not really.
Q
Speak a bit louder. Your voice is quite feeble.
Praveen
Hello.
Q
Okay. So my first question is related to the -- what you had said about the agri, non-agri segment. Is that the bifurcation for the volume we had given or the value?
Chandan Verma
Volume, volume. We always give a number -- whatever the number we are giving in terms of volume only. Okay. Second thing is on the PVC and VCM route, I recall that there is some procurement challenges. How that stays like that's normalized? Or still you are getting some issues? Yes, you are right, there were some structural issues which are going on globally in terms of the VCM market, and we are trying to work through it via our long-term contracts. Okay. So we are not facing any challenges related to procurement of VCM right now? I'm not saying that there are no challenges. But as I mentione
Q
A couple of questions. I wanted your broad thoughts on one, how are we looking at our market share in volumetric terms? That is one. Second is on the use of cash, any particular timeline that you have in mind on how we'll go about it? And third, any specific changes at the company level that you aspire for, say, over the next 12 to 18 months, 12 to 24 months? A specific question that I had over here was we have indicated in the past about the variable component for the employees. Has there been any progress? Do you think that, that is something which is required? So these are the first three q
Chandan Verma
Ritesh, Chandan here. So just to update because you know the PVC market pipe market is a very -- a mix of market where there is organized players and unorganized players both. So considering this, it's very difficult to give what the market share that we are having. Having said that, if you compare ourselves with the three major players, if you compare ourselves three major players like Astral, Supreme and Finolex. In that scenario, our sales roughly comes out to be 25%. If you compare ourselves with three big payers in PVC pipe segment, largely, number one. Number two, your question was cash.
Q
Just two clarifications here. One you said is mid-single-digit growth. And does that include the benefit of antidumping duty and channel restocking that you're already building up?
Udipt Agarwal
Yes, that takes care of. Yes, that's included in there. The benefit of the anti-dumping is already included in there. But you see that is the overall market correction. It would be more or less a pass-through for us. Understood. Secondly, what I wanted to understand was that one place, you said that you would be maintaining 15% sort of EBITDA margin. On the other one, your annualized EBITDA margin guidance stands about 10% to 12%-odd. So just wanted the clarity over there? And just on correct, just in the previous question, we have clarified that EBITDA margin for the year, we are going to mai
Q
Yes, sir, I just wanted to know current utilization. What is the current capacity utilization?
Chandan Verma
So this year, as of currently for the 6 months ended, our total capacity utilization is around 70%. 70%? Yes. And what are you expecting for '26 and '27? Next year? For full year '26 and '27? This will be around -- this will be roughly around 74% to 75% '27, '28. For both the years? Sorry, '26, '27.
Q
Sir, what is the reason for a substantial reduction in trade payable and other current liability for H1?
Chandan Verma
Reason for reduction in the other current liability, right? Yes, trade payable, major end. Yes, please, sir. So other current liability largely consists of our borrowings at the year-end -- at the point in time of reporting. So currently, since our procurement uplifting is low, and the last quarter, we have been at a full. That's why it represents the borrowing that we have in the market. So as our scale of operation is going to be higher during the upcoming quarter, then again, that will be equalized in terms of our year-end number. Vishal Shah And creditors? It is also the same line. So as t
Q
My question is for Mr. Agarwal. So I just wanted to understand since this is -- this is his first year. So is there any short-term and long-term focus against that he has? And also, is there something that needs to be changed in the company or something that he thinks that can be added in the company, anything of that sort?
Udipt Agarwal
Thank you for the question. See, our businesses, as we have been saying, is that we are pipes and fitting producer and marketeer, yes? So that position remains unchanged, yes. So we'll continue to drive the focus on pipes and fittings. And of course, we would be continuing to be looking at the products which we will be going into this kind of market. I think any company of our size will do that, that's normal to happen. We'll continue to drive the operational efficiency, we talked about just in the previous question, the capacities, what we have and what would be the utilization. There has bee
Q
Sir, also, you have mentioned about the full year guidance on the volume front and also on the volume mix between agri and non-agri. I just wanted to understand if we are to split it between -- the non-agri between housing and infra and then agri as well. In the second half, which segment do you think then have some sort of a negative surprise in terms of volume of our external factors?
Udipt Agarwal
So it's -- as we said earlier also, it's difficult to segregate and put a finger on how much is coming from the infra segment and how much coming from real estate in non-agri business because most of our business is through channel partners. So we do not deal directly. So it's difficult to put an estimate. Overall, we are able to say how much we are into agri and how much into non-agri. What was the second part of your question? Yes. Just the overall demand do you see in the agri in second half? I mean the agri demand is dependent on the quite largely on monsoon. But that's primarily otherwise
Q
Sir, can you detail the capex numbers for this fiscal, next fiscal and one after that, if possible?
Udipt Agarwal
Yes. I mean, we have been saying this that on a yearly basis, we have to continue to support the growth in the market. We will be investing anywhere between INR100 crores to INR200 crores at a minimum in terms of our capex. And that would be also the way we see at this moment would be the number going forward. Sir, this would be maintenance capex? Or would it be a new growth capacity? Just trying to understand how will the capacity number increase. So you indicated 520 KT right now. So can one assume this number to increase by say, 30, 50 KT every year, what should be considered? Yes. So if yo
Q
Sir, on the current quarter's EBITDA, what percentage would be attributable to the resin business and how much would be attributable to the pipes business?
Udipt Agarwal
See, we have been reporting the consolidated number because we do not sell resins now. So everything is for captive. So we always report it as one number. And eventually, we have been saying that the resin sales to the external parties is no longer there, except a few parties are very miniscule. So what are the volumes you are seeing is only the pipe volume. Okay. Just actually, I wanted to understand what -- for the current quarter's improvement, how much is due to the resin business and how much is due to the product mix in pipes? No, that you'll have to keep in mind because that is the reas
Q
No questions. My questions have been answered.
Management
Q
I just wanted to say thanks to everybody for attending today's call and this afternoon, very first day of the week. And -- but if there are any further questions, we would be happy to respond to those, please feel free to get in touch with us, and have a wonderful rest of the day. Thank you.
Chandan Verma
Thank you all participants from my side as well. Thank you for your interest in Finolex.
Speaking time
Udipt Agarwal
41
Chandan Verma
33
Ritesh Shah
21
Moderator
18
Shravan Shah
10
Praveen
10
Sonali
9
Varun
6
Mehul
5
Sneha Talreja
3
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Opening remarks
Arun Baid
Thank you, Mark, and good afternoon, everybody. On behalf of ICICI Securities, I welcome you all to the Q2 FY '26 Results con call of Finolex Industries. We have from the management's side, Mr. Udipt Agarwal, Managing Director; and Mr. Chandan Verma, CFO. Now I hand over the call to Mr. Udipt for his opening remarks, post which, we'll have the Q&A. Over to you, Udipt.
Udipt Agarwal
Good afternoon, gentlemen. Thanks, Arun. Good afternoon, ladies and gentlemen. Welcome to the investors conference call for quarter 2 of FY '26 and H1 FY '26 earnings release. We thank you for your continued support and interest in Finolex Industries. Finolex Industries has registered a marginal dip in volume during the quarter and also for the H1 of this current financial year, mainly on account of prolonged heavy monsoon. The operating performance of the company has been notably improved during the quarter and also during the first half of the year due to our continued focus on margin and also operational efficiency. The company's endeavor, as we have been saying in the last conference calls as well, is to grow in the non-agri segment is ongoing. And we will also talk about -- a little bit more about it as we go forward in our Q&A session. But before I open the floor for Q&A, I want to take you through some of the performance indicators. So Q2 financial year '26 some of the highlight
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