26-11-23
S2 FCL --Fineotex Chemicals
CMP 359
Market cap ~4000cr
ROCE ~36%,
ROE ~28%,
ROE 3Yr 25.5 %
D/E ~0
Consistent Dividend Payout
Consistent increase in revenues, Profits over a decade
Business, Revenues and SHP
➡️FINEOTEX group is one of the leading manufacturers of chemicals for textiles, construction, water treatment, fertilizer, leather, and paint industry. Fineotex manufactures and provides products for Pretreatment processes, Dyeing processes, Printing processes, and Finishing processes for textile processing to customers across the globe
➡️Company focus is on two categories --Textile chemicals and Clean & Hygiene chemicals
➡️Revenue 77% domestic, 23% International
➡️Bluesign, ZDHC, Star Export House Accreditations + several ISO certifications
➡️Fineotex Chemical Limited has earned the prestigious ECO PASSPORT by OEKO-TEX®️ certification, the highest rating in the globally renowned audit that measures standards of sustainability
➡️Received Dun and Bradstreet ESG Badge, it showcases the impact of ESG listing and ranking on organizations, and recognize their contribution towards sustainability
➡️Presence in more than 70 countries with 100 + dealers with 470+ product categories
➡️Consistent promoter holding, Good DII participation, Big Shark Ashish Kacholia holding 2.83% stake ( built his stake in last one year)
➡️Company has strong experienced leadership team and has reputed clientele
Strengths and Triggers
🟢Capex, expansion Done in last few years--Total capacity 104000MT, Ambernath plant is fungible and has the capabilities to manufacture products for both textile chemical and cleaning and hygiene segment.
🟢The facility is equipped with modern infrastructure and amenities, enabling sustainable chemical production with advanced automation, storage, and logistics handling
🟢Emerging/Expected Favorable tailwinds with UK FTA deal under discussion, Can open doors for Indian Textile segment and the company is proxy to textile sector
🟢Working capital days, Inventory days have come down significantly
🟢Malaysia plant has Easy access to high quality raw materials in the region. Malaysian plant provides raw materials to the Indian facilities. Cost benefits due to Free Trade Agreements (FTAs) with important regional markets like Vietnam, China and India
🟢Recent collaborations to expand product profile and geographical reach --
Eurodye-CTC, Belgium, to commercialize specialty chemicals for the Indian market
HealthGuard, Australia to become the exclusive global marketing and sales channel partner with joint operations from Malaysia
Setting up a state of art Research & Development center in collaboration with Sasmira Institute, one of India’s premier textile institutes
🟢Developed technical expertise to enter attractive new markets --like -Cleaning and Hygiene Chemicals Drilling Speciality Chemicals Other Speciality Chemicals
🟢Non-textile segments will drive volume and value growth going forward
🟢Team of 34 professionals for providing technical solutions to customers
🟢Technical barriers to entry and high levels of development and product customisation
🟢ICRA rating upgraded -Long Term Rating: A+ -Short Term Rating: A1+
🟢Successful acquisition and realisation of synergies with Biotex
RISKS
🔴Further Delay or non progress in UK FTA deal
🔴Textile exports remaining down or Reemergence with force by Bangladesh Textile companies
🔴Threat of imports of chemicals/dumping by China
Disclaimer -- Not a buy/sell recommendation.
Purely for studying the stock idea with risks and strengths
Your Profit, Your Loss based on your conviction