Ashish Kacholia portfolio: Deven Choksey sees 50% upside in this chemical stock

Ashish Kacholia portfolio: Fineotex Chemical share price is in a short-term consolidation phase where support is seen around ₹330-320, according to technical analysts. On the higher side, resistance is seen in the range of ₹410. Deven Choksey Research, in a recent report, mentioned that it anticipates a potential 50.7% increase from current levels and has advised investing in this stock from the Ashish Kacholia portfolio. On Tuesday's session, Fineotex Chemical share price is trading flat at ₹367.90 apiece on BSE.

In its report, the brokerage noted that despite a soft quarter in terms of revenue growth, the company maintained earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins at 26% following a strong financial year with the highest ever quarterly EBITDA. The company is poised for a bright future ahead, with multiple triggers coming into play for next year, including increasing cotton demand, inorganic international opportunity, and expansion of the cleaning and hygiene segment.

Ashish Kacholia shareholding

Fineotex Chemical is among the stocks held in the portfolio of Ashish Kacholia. Based on the shareholding pattern of Fineotex Chemical Ltd for the quarter spanning from April to June 2024, Ashish Kacholia possesses 31,35,568 shares of Fineotex Chemical, accounting for 2.81% of the company's overall paid-up capital.

Fineotex Chemical Q1 Results

In the June 2024 quarter, the company's revenue from operations amounted to ₹141.9 crore, representing a 7.3% increase from the ₹132.2 crore reported in the June 2023 quarter. The net profit for Q1FY25 totaled ₹29.2 crore, marking an 11.7% increase from the ₹26.1 crore recorded in Q1FY24. Additionally, EBITDA for the quarter under review reached Rs. 35.3 crore, reflecting an 11.8% increase from the ₹31.5 crore reported in the year-ago quarter.

The company has raised ₹342.55 crore through preferential allotment successfully. The capital will be used strategically to support organic and inorganic growth opportunities, including future expansion and meeting operational needs as specified in the offer document.

 Valuations 

"Currently, the stock is trading at 27x for FY25E and 20x FY26E EPS. With the successful recent fundraise, we have updated our estimates for the possible dilution and consequently lower our EPS estimate for FY26E by circa 8%. Given the upcoming triggers and strong growth possibility we maintain our target P/E multiple of 30x FY26E to arrive at a target price of ₹529/share (previously 573/share)," said Deven Choksey Research in its report.

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