Article

Fine Organics Industries Ltd - IPO Note (Not Rated)

07 Aug 2019 Nikita Bhoota

Issue Opens: June 20, 2018
Issue Closes: June 22, 2018
Face Value: Rs 5
Price Band:  Rs 780-783
Issue Size: ~Rs 598-600 cr
Public Issue: 76.6 lakh shares
Bid Lot: 19 Equity shares       
Issue Type: 100% Book Building

Shareholding (%)

Pre IPO

Post IPO

Promoter

100.0

75.0

Public

0.0

25.0

Source: RHP

Company Background

Fine Organics Industries Limited (FOIL) is a Mumbai based specialty chemical (oleochemical) company. FOIL produces wide range of specialty additives used in food, plastic and other industries. It had 387 products sold under the 'Fine Organics' brand in FY18. Its customers include FMCG companies like HUL, Parle Products, etc. FOIL currently has three facilities with capacity of 64.3k tonnes/year. It is planning to add 52k tonnes/year capacity over next two years taking total capacity to 116.3k tonnes by FY20E end. Company in 9MFY18 derived 44% revenue from India and rest 56% from exports markets.

Objective of the Offer

The object of the offer is to achieve benefits of listing and sale of up to 76.6 lakh shares (Rs600cr on upper end) offered by the promoter group shareholders. This is a 100% offer for sale issue.

Financials

Consolidated Rs cr.

FY15

FY16

FY17

9MFY18**

Revenue from operations

636

686

815

590

EBITDA Margin (%)

18.3

22.3

18.7

17.9

Adj. PAT

53.2

76.5

78.4

60.9

EPS (`)

17.3

24.9

25.6

19.9

P/E*

45.1

31.4

30.6

-

P/BV*

11.6

9.6

7.3

-

RoE (%)

25.7

30.5

23.8

-

Source: RHP, 5Paisa Research; *Ratios at higher end of the price band, **non-annualized numbers

Key Points

  1. FOIL is the largest manufacturer of oleochemical-based additives in India and one of the few large manufacturers in global oleochemicalbased food/plastic additives. FOIL was the first company to introduce slip additives to the Indian market and it now manufactures wide range of oleochemical-based additives. FOIL is a very competitive company in its sector, which has helped it in pricing its products attractively. This has discouraged major domestic/global players setting up a manufacturing facility in India.
  2. FOIL currently operates three production facilities, one each in Ambernath/Badlapur/Dombivli with combined installed capacity ~64,300 tonnes/annum. FOIL, in Q4FY19E will be commissioning production facility in Ambernath (32,000 tonnes/year). In Q3FY20E, FOIL will commission its JV facility in Germany (10,000 tonnes/year). Premia Research Fine Organic Industries Ltd Company is expecting to commission a 10,000 tonnes/year bakery/confectionary products ingredient manufacturing facility in Patalganga (JV with Fine Zeelandia) in Q1FY19E. Once these capacities are commissioned, the current capacity of 64.3k tonnes/year will grow to 1.16lakh tonnes/year in FY20E.

Key Risk

The company is nearly doubling its capacity over next two years and is also entering in oleochemical manufacturing in Germany. Company also claims that oleochemical is dominated by very few large companies and hence we believe that additional capacity additions may drive down the oleochemical realizations

Research Disclaimer

Similar Articles
  • Responses
  • Patidar Samaj

    - 2 hrs ago

    This article claims RJio was given a "Backdoor Entry" into the 4G Based Voice Routing. The peculiar aspect is without the Voice License, Rjio would have been a mere ISP. With the license, it is now a holistic communications service provider, with ability to exponentially scale the bouquet of products. The events indicate it was meticulously planned way before the auctions because the auctions were clear on the agenda: 4G for internet only.

Load More
Have Referral Code?

Recent Articles

Beginner's Corner

Fine Organics Industries Ltd - IPO Note (Not Rated)

07 Aug 2019 Nikita Bhoota

Issue Opens: June 20, 2018
Issue Closes: June 22, 2018
Face Value: Rs 5
Price Band:  Rs 780-783
Issue Size: ~Rs 598-600 cr
Public Issue: 76.6 lakh shares
Bid Lot: 19 Equity shares       
Issue Type: 100% Book Building

Shareholding (%)

Pre IPO

Post IPO

Promoter

100.0

75.0

Public

0.0

25.0

Source: RHP

Company Background

Fine Organics Industries Limited (FOIL) is a Mumbai based specialty chemical (oleochemical) company. FOIL produces wide range of specialty additives used in food, plastic and other industries. It had 387 products sold under the 'Fine Organics' brand in FY18. Its customers include FMCG companies like HUL, Parle Products, etc. FOIL currently has three facilities with capacity of 64.3k tonnes/year. It is planning to add 52k tonnes/year capacity over next two years taking total capacity to 116.3k tonnes by FY20E end. Company in 9MFY18 derived 44% revenue from India and rest 56% from exports markets.

Objective of the Offer

The object of the offer is to achieve benefits of listing and sale of up to 76.6 lakh shares (Rs600cr on upper end) offered by the promoter group shareholders. This is a 100% offer for sale issue.

Financials

Consolidated Rs cr.

FY15

FY16

FY17

9MFY18**

Revenue from operations

636

686

815

590

EBITDA Margin (%)

18.3

22.3

18.7

17.9

Adj. PAT

53.2

76.5

78.4

60.9

EPS (`)

17.3

24.9

25.6

19.9

P/E*

45.1

31.4

30.6

-

P/BV*

11.6

9.6

7.3

-

RoE (%)

25.7

30.5

23.8

-

Source: RHP, 5Paisa Research; *Ratios at higher end of the price band, **non-annualized numbers

Key Points

  1. FOIL is the largest manufacturer of oleochemical-based additives in India and one of the few large manufacturers in global oleochemicalbased food/plastic additives. FOIL was the first company to introduce slip additives to the Indian market and it now manufactures wide range of oleochemical-based additives. FOIL is a very competitive company in its sector, which has helped it in pricing its products attractively. This has discouraged major domestic/global players setting up a manufacturing facility in India.
  2. FOIL currently operates three production facilities, one each in Ambernath/Badlapur/Dombivli with combined installed capacity ~64,300 tonnes/annum. FOIL, in Q4FY19E will be commissioning production facility in Ambernath (32,000 tonnes/year). In Q3FY20E, FOIL will commission its JV facility in Germany (10,000 tonnes/year). Premia Research Fine Organic Industries Ltd Company is expecting to commission a 10,000 tonnes/year bakery/confectionary products ingredient manufacturing facility in Patalganga (JV with Fine Zeelandia) in Q1FY19E. Once these capacities are commissioned, the current capacity of 64.3k tonnes/year will grow to 1.16lakh tonnes/year in FY20E.

Key Risk

The company is nearly doubling its capacity over next two years and is also entering in oleochemical manufacturing in Germany. Company also claims that oleochemical is dominated by very few large companies and hence we believe that additional capacity additions may drive down the oleochemical realizations

Research Disclaimer