Finolex Industries – Q4 FY25 & FY25 Full Year Concall Highlights Financial Performance: - Q4 FY25 Revenue: ₹1,172 crore (declined 5% YoY); FY25 revenue: ₹4,142 crore (slight decline YoY). - Profitability: Q4 EBITDA dropped to ₹171 crore (14.6% margin); FY25 EBITDA: ₹476 crore (~21%), with margins impacted by higher interest and employee costs. - PAT: ₹150 crore for Q4; FY25 PAT: ₹778 crore, includes exceptional gains. - Balance Sheet: Strong net cash surplus of ₹2,535 crore as of March 2025; capex guidance for FY26 is ₹120–150 crore. Margins & Realizations: - Focus: Sharp focus on margin recovery in FY26 over volume growth. - Q4 Margin Recovery: EBIT/kg in pipes rose from ₹4 to ₹10.5; EBITDA margin at 14.6%. - Drivers: Cost control, operational efficiencies, better procurement, disciplined pricing, and improved product mix (higher non-agri and CPVC share). - Pricing Dynamics: ₹2.5/kg PVC price rise driven by demand and tight supply, not anti-dumping duties (ADD). Expect ADD to be implemented soon, potentially enhancing margins significantly. Capacity & Capital Allocation: - Expansion: 25,000 MT pipes capacity added in Q4, total capacity to increase from 420,000 to 470,000 MT. - Capex: ₹250 crore spent in FY25; similar levels expected in FY26, primarily on existing assets and efficiency improvements. - Cash Management: Surplus cash likely to be returned to shareholders if no large capex opportunities arise. Segment & Industry Insights: - CPVC Segment: 17% volume growth in FY25, forming ~5% overall; industry trend toward commoditization may lead to margin compression but volume growth expected to continue. - Agri vs. Non-Agri: 67% of volumes in agri, 33% non-agri; aiming for a 50:50 split over time. Focus on increasing non-agri share via dedicated projects, retail outreach, and digitization. - Fittings: Capacity of 50,000 MT; volume growth was muted (~1-2%) in FY25. Regulatory & Industry Environment: - ADD & BIS: ADD expected, providing a ₹3-6/kg price rise; BIS likely to restrict imports from China, boosting domestic industry. - PVC Prices: Q4 saw a drop but spreads like PVC-EDC (~$490/MT) and PVC-VCM ($160/MT) supported margins. - Demand Outlook: Robust in Q4 FY25, with strong pre-monsoon activity; long-term industry CAGR of 8–10% expected. Strategic & Operational Initiatives: - Focus on cost reduction, scrap control, TPM, and procurement efficiencies. - Digital initiatives include better retailer inventory visibility and direct engagement. - No immediate plans for new product categories or large geographical expansions; concentrate on optimizing existing capacity and product mix. Management Outlook & Risks: - Cautious optimism: Macro uncertainties (PVC volatility, oil prices, policies) could impact growth. - Margins: Expected to normalize and improve through internal efficiencies, despite possible margin compression in commoditized segments. - Asset Sales: No new sale plans; focus on organic growth and efficiency.