Date: 22-11-2023

Fineotex Chemicals Ltd – CMP – 318

Recommendation: Buy

Fundamental Grade : B Grade (Good Safety)

Brief about the company:

Fineotex Chemicals Ltd is engaged in the business of manufacturing auxiliaries and specialty chemicals for textiles, construction, water treatment, fertilizer, leather, and paint industries. The company manufactures more than 470+ product categories that involve specialty textile chemicals for the entire Textile value chain including Pre-Treatment, Dyeing, Printing, and finishing processes. It also manufactures water and oil-based drilling fluid chemicals and a wide range of home care disinfectants, detergents, and sanitizers.

The company has three manufacturing facilities: One unit present in Mahape with a total capacity of 36,500 MT, and another unit in Ambernath, Mumbai with a production capacity of 40,000MT (began production in November 2021), and a manufacturing unit in Malaysia with a capacity 6,500 MT.
Mahape Plant Utilisation: 65% Malaysia Plant Utilisation: 72%

Performance during Last 5 years:

Revenue grown at a CAGR of 30% and profit grown at a CAGR of 31% during last 5 years. Whereas share price reported CAGR return of 53%during this period. Return on equity for the past 5 year is above 22%.

Future Outlook:

The Indian Home Care market is currently valued at INR 35,000 Crores and is expected to grow at good pace the next 5 years. The Indian per capita annual consumption of detergent is 2.7-3 Kg which is still lower than those of developed countries and is expected to see usage of quality and premium products due to its rapid urbanisation, rising nuclear family structures and increase in disposable income.


At CMP, the stock is trading at PE of around 33 and P/B of around 8.85 which is slightly expensive. Further, the market capitalization is around 35 time cash flow which is also slightly on a higher side. The stock also run-up a lot during past 3 years. In spite of high valuation, considering good past performance and return ratios and also by considering the future potential of the stock, we may considering buying the stock at current price with a slightly longer term horizon. Further, a staggered buying may be done.

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