Finolex Industries Ltd (FINPIPE) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the Finolex Industries Limited Q2 FY '26 '27 Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. I now hand the conference over to Mr. Arun Baid from ICICI Securities. Thank you, and over to you.
Arun Baid (ICICI Securities): Good afternoon, ladies and gentlemen. On behalf of ICICI Securities, I welcome you all to the Q2 FY '27 post-result concall of Finolex Industries. From the management side, we have Mr. Udit Aggarwal, Managing Director, and Mr. Chandan Verma, CFO. Now I Now I hand over the call to Udit for opening remarks, and then the floor will be opened up for Q&A. Over to you, Udit.
Udit Aggarwal (Finolex Industries Ltd): Thank you, Arun. Good afternoon, ladies and gentlemen. Welcome to Finolex Industries earnings call for the second quarter and the half-year ended 30th September 2026. We are pleased to have you with us today. May I remind everyone that this call may contain
Udit Aggarwal (Finolex Industries Ltd): and the actual results may differ. All figures that we discuss on the call are on standalone basis, unless we explicitly mention otherwise. Coming to the quarter 2 FY27 performance, the results are available with you. As you might have seen that during the quarter, we had a strong volume recovery, with profitability remaining more or less flat due to higher material cost. During the quarter, sales volume grew 28% over year-on-year basis to 83,407 metric tons as channel destocking eased, and per and the PVC prices also kind of stabilized during the quarter. Revenue from the operations grew 28%, which is in line with the volume, and it is stood at 1,094 crores, mainly driven by the the volume growth. PBT, as we said, the profitability remained flattish. PBT during the quarter was at 153 crores as against a 158 crores of quarter 2 FY26. Coming to the full half-year performance of the current year, for the first half, the strong second quarter has largely made up for the weak first quarter, but not to the full extent and we see that the volume during the first half is 4% lower on an year-on-year year-on-year basis. During the first half of FY27, our volume was 151,106 metric tons as against 157,465 metric tons of the previous years. But this is primarily due to the quarter 1 lower numbers which we had. The revenue from operations grew during the first half 4% year-on-year to 1,978 crores. And this all is primarily due to the quarter 2 volume growth and also slightly better realizations during the quarter 2 period. For the full year, our profit before tax, PBT, rose 6% year-on-year to 300 crores as compared to 284 crores of the previous year first half. On the liquidity front, that continues to remain strong, and we have a net free cash flow of about 2,584 crores as on 30th of September 2026. Now, I want to take you through also some of the recent developments which are taking place in respect to the PVC and the PVC pipes market. One of the several reasons that we saw that the price stabilization at a slightly better level was the introduction of the minimum import price for suspension-grade PVC resin. However, the geopolitical developments, as we all are aware, particularly geopolitical developments in West Asia, they continue to remain uncertain and for the with respect to the raw material supply and also with respect to the PVC supply. But we continue to, as always, monitor them very closely. Yeah. But, it's not only us. It is the industry-wide industry-wise top topic. On the business environment side, I think we also quite a lot of disruption in the quarter 1, driven by the volatility in the prices, to a much more stable in quarter 2 as far as the PVC pricing is concerned. Although there has been an increase, but the the volatility was less. Yeah. And we see that the quarter 2 volume recovery is is happening across the organized industry that was largely driven by restocking by the channel. Traditionally, if you look at it, quarter 2 is normally a softer quarter for us, for PVC pipes, as agriculture demand moderates due to monsoon months. Okay. However, our volume growth this this quarter reflects the recovery from the price-led destocking which happened in the quarter 1. If I try to look into the future a little bit, the recovery, as we expected last quarter, has begun to show in volume in our current months. Yeah. What is also is that the second half of this year looks like January to May, which is the pre-monsoon window, which is seasonally our strongest period in terms of our volumes. Yeah. So, and we enter into the have the into the second half of the year with a more normalized channel inventories and a steadier pricing environment. We remain, among of in the midst of all this,
Udit Aggarwal (Finolex Industries Ltd): situation. We remain cautiously optimistic, and our endeavor will remain focused on our maintaining sustainable margins together with the volume growth over time. Thank you for your continued trust and support. We now open the floor for questions and answers. And with me also here is Mr. Chandan Verma, our CFO, try and answer all the questions.
Chandan Verma (Finolex Industries Ltd): Hi. Good afternoon, all the participants. We are for the Q2 earning call of the Finolex Industries Limited. We invite all the questions from the participants. You can you can go ahead, please.
Moderator: Thank you. We will now begin the question and answer session. Participants who wish to ask a question may press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We have the first question from the line of Sneha from Talreja's. Please go ahead.
Sneha (Talreja's): Hi, sir. Good evening and thanks a lot for the opportunity. Sir, couple of questions from my end. While your volume growth, you said, you know, was led by also restocking, and all, what could be the reason for the reason for margin suppression? While I understand that, you know, you also said that this was not the agri quarter, agri is quite missing, so it could not be product mix is what I guessed. But why are, you know, margins are under pressure, despite your, you know, raw material prices increasing and maybe some amount of inventory gain, could you give some color on that?
Chandan Verma (Finolex Industries Ltd): Yeah. Sneha, good afternoon. So, Sneha, as you rightly pointed out, though we have registered a volume growth of 28%, we have seen a slight pressure on the margin side. Now, what here how it happened on the Q1 when you see at the entry of the Q1, when you see the raw material price has started to go out, go up at the higher direction. At the At that point in time, we're having we procured certain inventory at the lower side. That got utilized during the Q1, but over the period in time, when we procured our inventory during Q1 and which has got effectively consumed during Q2, that has resulted into the pressure on the margin side. So, basically it's a time lag. What happened, as you know, price gets impact immediately. Realization gets impact immediately, but there is a lag in the raw material price. That is the effect we are seeing during Q2.
Sneha (Talreja's): Sir, just a just extension of the same question. What is the kind of lag impact that we are seeing in terms of passing on the raw material prices, sir? Be it PVC or CPVC?
Chandan Verma (Finolex Industries Ltd): So, as you know, Sneha, the sales price immediately gets affected in the market immediately basis. However, as the the margin remained always volatile in terms of in terms of our point in booking of the raw material prices, and the and the when it gets consumed. So, you know our industry works in the same same direction, where realization will be gets impacted immediately, however, the raw material depends upon at what price, at what point in time we booked into.
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