FIIs bought 27,23,098 shares: Ashish Kacholia's portfolio specialty chemical stock in focus as company receives upgrade in credit rating from ICRA

The stock is up by 21 per cent from its 52-week low of Rs 281.05 per share and gave multibagger returns of 1,250 per cent returns in 5 years.

On Wednesday, shares of Fineotex Chemical Ltd (FCL) plunged 1.11 per cent to Rs 368.45 per share from its previous closing of Rs 372.60. The stock’s 52-week high is Rs 458 and its 52-week low is Rs 305.20.

Fineotex Chemical Limited (FCL) recently announced an upgrade in its credit ratings by ICRA, reflecting the company's robust financial position and positive growth outlook. This upgrade, effective as of November 11, 2024, applies to several of FCL's instruments, including its long-term fund-based cash credit, which is now rated [ICRA]A+ (Positive), and its unallocated long-term and short-term instruments rated [ICRA]A+ (Positive)/[ICRA]A1+. This rating reflects ICRA’s confidence in FCL's future prospects, buoyed by anticipated growth in cash flows and operational expansion, which are expected to sustain healthy profit margins. The upgrade marks a significant achievement for FCL, especially as it builds on previous upgrades, indicating continuous operational and financial excellence over the past 18 months.

The company has strategically diversified beyond its core specialty textile chemicals into other segments such as home care and hygiene products, which strengthens its resilience to market cyclicality. With operations across approximately 70 countries, FCL has fortified its global presence and caters to high-demand markets, supported by in-house R&D initiatives and joint ventures like those with Eurodye-CTC and HealthGuard. These collaborations not only broaden its product offerings but also enhance its ability to attract a diverse clientele across industries and geographies. The company’s subsidiary in Malaysia, Biotex, plays a critical role in R&D, contributing to product innovation and sustainable practices recognized by global standards such as Bluesign and ZDHC.

FCL’s solid financial standing is underpinned by low debt levels, strong liquidity, and consistent cash flow, ensuring ample flexibility for future expansion. The company's performance metrics for FY2024 demonstrate this financial strength, with an operating profit margin of 26.1% and a net profit margin of 21.3 per cent, supported by a strong demand pipeline. These positive developments reinforce FCL's position as a leader in the specialty chemical sector, committed to growth through both organic and inorganic means, including recent equity and warrant issues that further bolster its capital reserves for strategic investments.

About the Company

Fineotex Chemical Ltd, founded in 1979, is a leading manufacturer of speciality chemicals for various industries. Their core business is textile chemicals, with a focus on research and development through their subsidiary Biotex Malaysia. They also offer cleaning and hygiene products like sanitisers and detergents. Fineotex boasts over 470 product categories, including chemicals for every stage of textile production, oil and water-based drilling fluids, and home care disinfectants. With a presence in over 70 countries and a network of over 100 dealers, they serve major clients like Nahar Group and Raymond in the textile industry.

An ace investor, Ashish Kacholia holds 31,35,568 shares or 2.74 per cent stake in the company as of September 2024. Additionally, in September 2024, FIIs bought 27,23,098 shares and increased their stake to 3.28 per cent compared to 0.92 per cent in June 2024.

The company boasts a robust financial position with a market capitalization exceeding Rs 4,000 crore, coupled with a significant debt reduction. Over the past five years, the company has consistently demonstrated impressive profit growth, achieving a remarkable CAGR of 39.8 per cent. This positive trajectory is further evidenced by the strong financial performance exhibited in both the Quarterly Results (Q1FY25) and the annual results (FY24).

Notably, the company's ROCE reached 39 per cent and the ROE stood at 30 per cent for the same fiscal year, highlighting its efficient capital utilization and profitability. The stock is up by 21 per cent from its 52-week low of Rs 281.05 per share and gave multibagger returns of 1,250 per cent returns in 5 years.

Disclaimer: The article is for informational purposes only and not investment advice.