500% Returns: Ashish Kacholia Backed Multibagger Small Cap Specialty Chemical Stock Gets BUY From Brokerages

In Wednesday's trading session, Fineotex Chemicals Limited (FCL) will be in focus as the small cap company's stock garnered attention with a 'Buy' rating from multiple analysts. The Mumbai-based specialty chemical producer has been recognised in the market, particularly with its foray into high-growth FMCG segments, which now contribute a significant 40% to its overall revenue.

Over the past year, FCL's stock has been a healthy performer, delivering returns of 53.32%, significantly outpacing sectoral returns that stood at 34%. This growth trajectory has solidified the company's position, ranking 22nd out of 140 companies in the chemicals sector.

The optimism surrounding FCL received a substantial boost from domestic brokerage firm Deven Choksey Research, which issued a 'BUY' rating on the stock, projecting a potential upside of 65%. Their target share price of Rs 571 per share reflects this bullish sentiment.

Highlighting FCL's recent performance, the research report emphasized a robust quarter, with standalone profits for 9MFY24 soaring by 101%. Analysts foresee further growth, particularly as cotton prices trend lower, potentially bolstering FCL's future performance. Moreover, the company's recent fundraising efforts for foreign opportunities are anticipated to provide an additional boost to its growth prospects.

Currently, FCL's stock is trading at promising valuation multiples, with a PE ratio of 33x/25x/19x for FY24E/FY25E/FY26E EPS, respectively. Analysts at Deven Choksey Research assign a PE multiple of 30x, arriving at a target price of Rs 570 per share. This optimism stems from the considerable upside potential of 65% from current levels, reaffirming the 'BUY' rating on Fineotex Chemical Ltd.

Adding to the chorus of positivity, brokerage firm NVS Wealth Managers also issued a 'BUY' call on FCL, setting share price targets of Rs 556 and Rs 603 per share. The firm projects strong operational performance for FCL in FY24, with an expected profitability of Rs 125 Crores. Looking ahead, the next two years are forecasted to be the best in the company's history, with anticipated profits of Rs 175 Crores in FY25 and Rs 245 Crore in FY26.

Reflecting on FCL's performance in FY2023, the company achieved a total revenue of Rs 524 Crores, marking a remarkable 40% increase year-on-year. Additionally, the EBITDA surged to Rs 112 Crores, exhibiting 58% growth. PAT also saw a substantial growth, reaching 90 crores, showcasing a 58% increase over the previous year.

As of 1:10 pm on the National Stock Exchange (NSE), Fineotex Chemical's shares were trading with gains of more than 1% at Rs 381.60 per share. The stock has delivered returns of nearly 55% to its investors in the last one year and has surged nearly 480% in the last three years.