Specialty Chemical Stock: Total Dividend Payout of Rs. 446.94 Lakhs; Buy Ashish Kacholia Stock?

Having been established in 1979, Fineotex Chemical is a prominent manufacturer and supplier of speciality chemicals, commanding a dominant market share in both the domestic and international textile industries. The company produces chemicals for the pre-treatment, dyeing, printing, and finishing phases of the textile industry's value chain. The company has successfully entered the home care, hygiene, and specialist chemical drilling industries, all of which are assisting the company's current next stage of expansion. The company exports to more than 69 countries and produces more than 470 products. Fineotex Chemical is among the portfolio stocks of ace investor Ashish Kacholia in which he owned a stake of 2.74% comprising 31,35,568 fully-paid up equity shares of the company.

Fineotex Chemical Dividend

"The Board has recommended a dividend of Rs. 0.40 per equity share having face value of Rs. 2 each for the financial year ended 31st March 2024 (Dividend for financial year 2022-23 Rs. 0.80 per equity share of Rs. 2 each) at a total payout of Rs. 446.94 Lakhs out of its current profits,subject to the approval of Members at the ensuing Annual General Meeting (hereinafter referred to as 'AGM') of the Company. If the final dividend is approved by the members, then the same will be paid within 30 days from the date of approval. During the year, the company has declared and paid an Interim Dividend of Rs. 1.20/- per equity share having face value of Rs. 2/- each for the financial year 2023-24 at a total payout of Rs. 1329.18 Lakhs out of the profits of the company. The Company has fixed Tuesday, September 03, 2024 as the "Record Date" for determining entitlement of Members to final dividend for the financial year ended March 31, 2024, if approved at the AGM," said Fineotex Chemical in an exchange filing.

Fineotex Chemical Q1 Results

The company reported revenue from operations of Rs 106.61 crore in the June 2024 quarter up 21% from Rs. 88.11 crore in the June 2023 quarter. Its net profit stood at Rs. 21.85 crore in Q1FY25 down 3.3% from Rs. 22.59 crore in Q1FY24. EBITDA stands at Rs. 30.42 crore in the quarter under review up 3.82% from Rs. 29.30 crore in the year-ago quarter.

Fineotex Chemical Share Price Target

"After a strong financial year with highest ever quarterly EBITDA, FCL had a relatively soft quarter in terms of revenue growth, but EBITDA margins remain intact at 26%. With multiple triggers coming into play for next year 1) increasing cotton demand 2) inorganic international opportunity 3) expansion of cleaning and hygiene segment, we believe the company is poised for a bright future ahead. Currently, the stock is trading at 27x for FY25E and 20x FY26E EPS. With the successful recent fundraise, we have updated our estimates for the possible dilution and consequently lower our EPS estimate for FY26E by circa 8%. Given the upcoming triggers and strong growth possibility we maintain our target P/E multiple of 30x FY26E to arrive at a target price of INR 529/share (previously 573/share). Given the 50.7% upside from the current levels we recommend a "BUY" rating on the stock," said the brokerage firm KRChoksey Research in a report.

Disclaimer

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