“The commissioning of the Patalganga capacities (10,000 tons in Q2 FY21) and the rising utilisation levels at Ambarnath would drive business. Further, operating leverage and rising share of value-added products would help to log higher EBITDA margin”, the brokerage firm said in a company update.
Fine Organic Industries
reported robust gross margin of around 40 per cent in Q1FY20 primarily driven by benign raw material prices, as around 50 per cent of revenue is based on fixed price long-term contracts. The company indicated that raw material prices will remain soft even in Q2, which will likely aid margin.
"Prices of raw materials, particularly palm oil, continue to be soft due to growing environmental concerns in Europe and thr US and rising inventories in Malaysia and Indonesia (largest palm producers)," analysts at SBICAP Securities said in company update.
The brokerage firm remains positive on Fine Organic Industries’ growth prospects over the medium term and expects it to deliver mid-to-high-teen earnings growth while sustaining margins and RoE (early twenties/mid-twenties respectively). However, the stock was trading above target price of Rs 1,530 per share.
At 01:05 pm, the stock was up 7 per cent at Rs 1,717 on the BSE, as compared to a 1 per cent decline in the S&P BSE Sensex. A combined 77,378 shares changed hands on the counter on the NSE and BSE till the time of writing of this report.