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Channel Restocking Drives Volume Recovery

FNXP P&F volumes recovered in Q2FY27, supported by channel restocking following significant destocking in Q1FY27 amid PVC price volatility. Management indicated that channel inventory levels have largely normalised, with Oct’26 volumes witnessing a relatively better performance and turning marginally positive YoY. While the company refrained from providing specific volume growth guidance for FY27, it remains cautiously optimistic about H2FY27 recovery, supported by stabilising PVC prices and improving demand conditions. Management reiterated its FY27 EBITDA margin guidance of 14–15%.We estimate revenue/EBITDA/PAT CAGR of 6.2%/1.4%/2.9% for FY26-29E with P&F volume CAGR of 3.0% and EBITDA margin of 14.4% by FY29E. We maintained ‘BUY’ rating with a TP of INR 206 based on 18x Sep’28 earnings plus valued stake in the group listed entity Finolex Cables at 50% discount to consensus target market value.

Q2FY27 financial performance:

FNXP revenue grew by 27.4% YoY to Rs10.9bn, (Ple: 9.2bn). Pipe & fittings volume increased by 27.7% YoY at 83,407MT. Gross margins contracted by ~1000bps YoY to 32.6% (PLe: 42.0%). EBITDA reported Rs 1.2bn down by 4.5% YoY (PLe: Rs 1.3bn) with EBITDA margins contracted by 380bps to 11.4% (PLe: 14.5%). PBT stood at Rs 1.5bn (Ple: Rs1.6bn). Adj PAT remained flat YoY at Rs 1.1bn (PLe: Rs 1.3bn).

H1FY27 financial performance:

Revenue grew by 4.0% YoY to Rs 19.7bn, Pipe & fittings volume declined by 4% YoY to 151,106MT. Gross margins contracted by 175bps YoY to 35.4%. EBITDA grew by 3.2% YoY to Rs2.3bn. EBITDA margins remained flat YoY to 11.7%. PBT grew by 4.7% YoY to Rs 2.9bn. PAT grew by 3.5% YoY to Rs2.3bn.

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