Finolex Industries reported a consolidated PAT of ₹800.03 Cr, up 69% YoY, with revenue of ₹4,141.97 Cr. But here’s the twist: ₹417 Cr of that profit came from an exceptional land deal in Pune. EPS jumped to ₹12.94, and the company declared a ₹3.60/share dividend. So, is this plastics major turning into a real estate PE fund?
🏭 About Finolex Industries
- Founded: 1981
- Headquarters: Pune
- Business Segments: PVC pipes & fittings, PVC resin
- Associates: Finolex Plasson Industries, Pawas Port Ltd
- FY25 Pivot: Monetized Chinchwad land → ₹416.99 Cr exceptional gain
Think of it as India’s trusted plumber, now flipping land on the side.
🧑💼 Key People & Management
| Name | Role |
|---|---|
| Saurabh Dhanorkar | MD |
| Dakshinamurthy Iyer | Company Secretary & Legal |
| Walker Chandiok & Co. | Auditor (✅ unmodified) |
✅ No audit flags
⚠️ Big one-time gain this year — not part of regular business operations
📊 FY25 Financials (Consolidated)
| Metric | FY25 (₹ Cr) | FY24 (₹ Cr) | Change |
|---|---|---|---|
| Revenue from Ops | ₹4,141.97 | ₹4,317.43 | 🔻 -4.1% |
| Other Income | ₹246.63 | ₹179.95 | 🔼 +37.1% |
| Total Income | ₹4,388.60 | ₹4,497.38 | 🔻 -2.4% |
| EBITDA (Est.) | ₹671.5 | ₹630.5 | 🔼 +6.5% |
| Net Profit (Reported) | ₹800.03 | ₹473.59 | 🚀 +68.9% |
| EPS (Basic/Diluted) | ₹12.94 | ₹7.66 | 🔼 +68.9% |
| Dividend | ₹3.60/share | ₹2.50/share | 💰 +44% |
⚠️ Normalized PAT excluding land deal = ~₹383 Cr → EPS ~₹6.20
🧾 The Big Exceptional Item
📍 Finolex sold a 25.27-acre land parcel in Chinchwad, Pune for ₹417 Cr.
- This adds ₹416.99 Cr to FY25 profit
- Won’t repeat next year
- Without this: YoY profit would be flat/slightly down
So, what you’re seeing isn’t a business turnaround — it’s an asset monetization boost.
📈 Segment Performance
| Segment | Revenue (₹ Cr) | Segment Profit (₹ Cr) |
|---|---|---|
| PVC Resin | ₹1,660.01 | ₹195.50 |
| Pipes & Fittings | ₹4,104.05 | ₹235.63 |
| Inter-segment sales | ₹-1,622.09 | – |
🛠️ Pipes & fittings still dominate revenue, but profit margins compressed. Resin biz margin improved due to better realizations.
💸 Fair Value Estimate
- EPS (Reported): ₹12.94
- EPS (Adjusted): ~₹6.20
- Sector PE (Pipes): 20x
- Fair Value (Adjusted): ₹124 – ₹145
- CMP: ₹207.49 = Pricing in land sales + future pipe optimism
🎯 Market is betting on dividend + potential asset monetization repeat.
📦 Balance Sheet Snapshot
| Item | FY25 (₹ Cr) | FY24 (₹ Cr) |
|---|---|---|
| Total Assets | ₹7,381.93 | ₹7,057.85 |
| Net Worth | ₹6,096.87 | ₹5,634.27 |
| Borrowings | ₹221.08 | ₹381.95 |
| Cash + Equivalents | ₹44.39 | ₹2.15 |
| Inventory + Receivables | ₹1,161.67 | ₹1,185.66 |
✅ Net Debt-free
✅ Working capital managed better
📈 Equity base strengthened post asset gain
🧃 Cash Flow Highlights
| Metric | FY25 (₹ Cr) | FY24 (₹ Cr) |
|---|---|---|
| Operating Cash Flow | ₹382.68 | ₹353.30 |
| Investing Cash Flow | ₹8.34 | ₹-82.97 |
| Financing Cash Flow | ₹-348.78 | ₹-276.74 |
| Net Cash Flow | ₹42.24 | ₹-6.41 |
💰 Operating cash flows strong
🧨 Heavy dividend payout = negative financing cash
🚀 Land sale = boost to investing cash
🤡 EduInvesting Take
Finolex isn’t just about pipes anymore.
- FY25 profit is not from pipes, it’s from property
- Core business? Still profitable, but not booming
- Dividend? Excellent.
- Growth visibility? Weak, unless new capacity kicks in or agri demand revives
If you think the company has more non-core assets to monetize, then CMP ₹207.49 makes sense.
If not, this is fairly valued, with bonus profit baked in.
⚠️ Risks & Red Flags
- 🧾 Land gain is non-recurring
- 📉 Core revenue is declining
- 🔁 Pipes biz is highly cyclical (agri, monsoon linked)
- ⚖️ Tax payout high — ₹243 Cr this year
- 🧍 Management churn — new internal audit head, CHRO resigned
🧠 Final Verdict
Finolex FY25 results are a reminder that exceptional items make ordinary stocks look extraordinary.
- CMP ₹207.49
- Reported EPS ₹12.94
- Dividend ₹3.60
- Adjusted EPS = ~₹6.20
It’s a steady dividend play with upside only if pipe demand revives or asset flipping becomes a trend.
Author: Prashant Marathe
Date: May 24, 2025
