Fine Organic Industries LTD Result update: Q1FY24

Company Overview:

Fine Organic Industries LTD, founded in 1970 by Mr. Ramesh Shah and Mr. Prakash Kamat, is a leading player in the field of oleochemical-based additives used in various industries including food, plastics, cosmetics, and coatings. As the largest organized manufacturer of oleochemical-based niche additives in India, Fine Organic has expanded its global presence. The company boasts a diverse product portfolio comprising food additives, polymer additives, additives for coatings, and feed nutrition additives.

 Distribution and Clientele:

Fine Organic operates strategically with warehouses in the USA and Europe, maintaining a robust network of over 180 distributors serving 850 direct customers and 5,000 end users worldwide. The company’s reach extends to more than 80 countries, distributing a wide range of 470+ products. Manufacturing facilities are located across seven sites in Maharashtra, including Patalganga, Badlapur, Dombivli, and Ambernath. Notable clients of Fine Organic include industry giants like Coca-Cola, Britannia, Asian Paints, Parle, Pidilite, Berger Paints, among others.

Company Performance in Numbers (FY18-FY23):

Over the past five years, Fine Organic has exhibited remarkable growth:
Revenue from operations surged at an impressive CAGR of 31%, reaching ₹3,029.15 Cr in FY23 from ₹1,043.97 Cr in FY18. EBITDA experienced a robust CAGR of 37%, climbing to ₹781.28 Cr in FY23 from ₹222.25 Cr in FY18, with EBITDA margins improving from 21.30% to 25.79% in FY23.
PAT (Profit After Tax) nearly doubled, achieving a CAGR of 46% YoY, increasing from ₹129 Cr in FY18 to ₹590.60 Cr in FY23. This growth was driven by enhanced operating efficiency and margin expansion, with PAT margin improving from 12.4% to 19.5% in FY23. Despite high profit growth, Fine Organic maintained moderate return on equity and capital employed, growing at 11% and 10% CAGR respectively.

Key Ratios and Valuations (FY23):

In FY23, Fine Organic demonstrated strong financial health and attractive valuations:
The company’s PE ratio stands at 26.5, while the industry PE is higher at 31.8, indicating a favorable valuation. Additionally, it trades at 9.5 times its book value. The interest coverage ratio improved significantly to 164.18 in FY23 from 63.13 in FY22, reflecting improved debt management. The current ratio increased to 5.5% in FY23 from 3.56 in FY22, indicating strong liquidity. Fine Organic reduced its debt-to-equity ratio by 67%, achieving a nearly debt-free status at 0.02% in FY23 from 0.06% in FY22.The return on equity for FY23 reached an impressive 47.62%, showcasing strong profitability. Debtor turnover remained stable at 7.49% (48 debtor days), indicating efficient receivables management. EBIT margins improved to 24.21% in FY23 from 16.61% in FY22, and net profit margins increased from 13.49% to 19.5%, highlighting improved operational efficiency.

Q1FY24 Results Updates: Standalone

Standalone In Q1FY24, Fine Organic faced some challenges:
Revenue decreased by 29.2% YoY and 23.8% QoQ to ₹532.13 Cr, with exports contributing 54% and the domestic market 46%. Gross profit declined by 26.5% YoY and 16.4% QoQ to ₹228.11 Cr, but gross margins improved by 160 bps YoY to 42.87% due to a significant decrease in COGS by 31.23% YoY and 28.55% QoQ. EBITDA decreased by 26.12% YoY and 18.90% QoQ to ₹151.86 Cr. EBITDA margins improved by 120 bps to 28.54% due to reduced operating expenses. PAT declined by 27.38% YoY and 17.2% QoQ to ₹114.21 Cr, with margins remaining relatively flat at 21.4% YoY and 19.76% PQ. Earnings per share (EPS) for the quarter stood at ₹37.20, down from ₹44.98 in the previous quarter.

conclusion:

Fine Organic Industries LTD has been on a remarkable growth trajectory over the past few years, demonstrating strong financial performance and expanding its global presence. Despite facing challenges in the recent quarter, the company’s solid fundamentals and attractive valuations make it a compelling player in the industry.