Ashish Kacholia stayed put on Fineotex Chemical in Q3 despite sharp fall in shares

Seasoned investor Ashish Kacholia stayed put on Fineotex Chemical in the December quarter, even as the scrip has fallen 40 per cent from its 52-week high level. Kacholia held 29,24,072 shares, or 2.64 per cent stake, in Fineotex Chemical in the December quarter, the same as September quarter.

Kacholia held 1.93 per cent stake in the company as of June 30 and 1.84 per cent stake as of March 31, 2022.

The ace investor was seen holding on to the stock, even as the scrip tumbled 39.80 per cent from its 52-week high of Rs 409.45 hit on September 13, 2022, to Rs 246.45 on Thursday. Nonetheless, the scrip is still up 88 per cent for the one-year period and 183 per cent in the last five years.

Fineotex manufactures over 450 specialty chemicals, catering mainly to the textile sector, apart from other sectors such as construction, water treatment, agrochemicals, adhesives, and other industries. In the last two years, the company has also started manufacturing home care and hygiene products and drilling chemicals.

Rating agency ICRA while assigning its rating on the company's instruments in November 2022 said Fineotex Chemical has a strong financial risk profile, reflected in healthy profit margins and comfortable capital structure and strong coverage indicators.

The consolidated entity's revenue, it said, grew at a CAGR of 12 per cent over FY18-FY21, while the operating profit margin (OPM) and n et profit margin (NPM) remained in the range of 18-22 per cent and 7-20 per cent, respectively.

In FY2022, the company’s revenues grew 68.5 per cent YoY, driven by the sharp increase in volumes, following the commencement of operations of the new plant at Ambernath in November 2021 and further supported by healthy improvement in realisations, ICRA said.  The OPM and NPM stod at 19.5 per cent and 15.4 per cent, respectively, in FY22.

The capital structure and coverage indicators have also remained healthy with low gearing in the last five years, ICRA said.

The rating agency said Fineotex is exposed to the volatility in raw material prices, but has been able to pass on the price fluctuations due to its focus on specialty chemicals and customised value-added solutions. It noted that the company was expanding the capacity at Ambernath, which should be operational in H2FY2023.

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