Buy Fineotex Chemical Limited Ltd For Target Rs. 51.0 by Choice Institutional Equities Ltd
CCT Integration & Capacity Expansion Drive Next Phase of Growth
The successful integration of CrudeChem Technologies (CCT), alongside manufacturing capacity expansion from 80K MTPA to ~148K MTPA, strengthens FTXC's positioning in oilfield specialty chemicals. Operational improvements under FTXC’s management have enhanced execution capabilities, scalability and capacity utilisation, contributing to 20% QoQ revenue growth. The company also successfully passed through higher raw material cost, with EBITDA margin improving 178 bps QoQ to 15.7%. We believe higher utilisation of the expanded CCT facility, coupled with operating efficiency, is anticipated support sustained margin expansion and
View and Valuation
We marginally raise our FY27E / FY28E revenue estimate by 3.6% / 1.9%, respectively, and increase our EBITDA margin assumption by 29 bps, an 8,000 MTPA increase in CCT capacity announced in the quarter and a beat on our estimate for Q1FY27. Our revised estimate implies Revenue / EBITDA / Attributable PAT CAGRs of 48.3 / 50.3% / 43.1% over FY26–FY29E. Based on our DCF valuation, we therefore maintain our ‘BUY’ rating and target price of INR 51. Our target price implies a P/E multiple of 23.8x on FY28E EPS and a PEG of 0.6x, considering an EPS CAGR of 43.1% over FY26–FY29E.
Key Risks to our Valuation
Probable slower-than-expected CCT ramp-up, a possible slowdown in US drilling and production activity and probably renewed escalation in West Asia tension.
Inorganic Opportunities Reinforce Long-term Growth Outlook
Since FTXC’s acquisition of CCT in December 2025, it has delivered meaningful improvements in operational efficiency, execution capabilities and manufacturing scale. We believe this strengthens the management’s credibility in pursuing future acquisition opportunities across oil & gas and water treatment segments. FTXC’s debt-free balance sheet, supported by over INR 3.6 Bn in cash and investments and healthy cash generation capability, provides sufficient flexibility to fund inorganic growth without placing undue stress on the balance sheet
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SEBI Registration no.: INZ 000160131
