Finolex Industries reports improved EBITDA margins driven by pricing strategies and regulatory changes, offsetting a significant fall in volumes amid volatile market conditions and policy support, maintaining a cautiously optimistic outlook for the year.
Finolex Industries said its first quarter was marked by a sharp swing between weaker volumes and firmer margins, as pricing discipline and regulatory changes helped offset a steep drop in sales. The PVC pipe maker reported that EBITDA margin improved to 12% from 9% a year earlier, while EBITDA rose 14% to ₹107 crore, even as total volumes fell 27%. Management linked the margin gain to better realisations, contained costs and the benefit of backward integration, which gives the company an advantage in resin procurement and shields it somewhat from raw material swings.
The biggest pressure came from the agri business, where demand was hit by volatile PVC prices and channel destocking during the usually stronger pre-monsoon period. According to management, agri volumes fell 27% and non-agri volumes declined about 24%, with April the weakest month and June more normal before July showed a clear recovery. The company said the market share picture had not materially changed versus the previous year, and that comparisons with peers were complicated because some rivals have larger polymer portfolios.
Finolex is also taking comfort from policy support. Management said the withdrawal of customs duty exemption and the introduction of a minimum import price on PVC resin should help steady domestic pricing, reduce volatility and support demand recovery. The company said the channel inventory is now close to normal after significant destocking, and that most of the recent price increase has already been passed on to customers apart from a small portion. It also said VCM availability remains constrained by Middle East disruption and tight feedstock conditions in north-east Asia, although its EDC-based line continues to run.
Despite the weak quarter, the company remained constructive on the medium term. It said July was the best month of the year so far and that first-half FY27 volumes could be flat to slightly positive if the recent trend continues. Finolex kept its earlier margin aspiration of around 15% for the full year, but declined to offer firm guidance because of ongoing volatility. It also pointed to ₹2,636 crore in cash, annual capital spending of roughly ₹125 crore to ₹200 crore and a longer-term plan to expand capacity through de-bottlenecking, while continuing to build a more balanced mix between agri and non-agri products and grow its CPVC business.
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