1100% Returns: Ashish Kacholia Backed Multibagger Smallcap Stock In Focus; What Analysts Say?

Fineotex Chemicals, a specialty chemicals company, has faced a challenging run on the stock market in recent months. Despite a 0.20% dip to Rs 325.15 per share on the National Stock Exchange (NSE) at 2:15 pm on Monday, analysts remain optimistic about the company's potential for recovery and long-term growth, underpinned by its fundamentals and expansion plans.

Stock Performance

Fineotex Chemicals' stock has been under pressure in 2024, with a 12% decline year-to-date. After touching a 52-week high of Rs 458.85 on February 19, the stock slid to a low of Rs 303.80 on June 4. The downward trend persisted in the last three months, with the stock dropping 8% in December, 6% in November, and another 8% in October.

Despite the near-term setbacks, Fineotex Chemicals has delivered impressive long-term returns. Over the last five years, the stock has soared by 1,076%, and it has climbed nearly 150% over the past three years.

Ashish Kacholia's Stake

Renowned investor Ashish Kacholia, known for his savvy stock picks, holds a 2.74% stake in Fineotex Chemicals, translating to 31,35,568 shares worth Rs 106.2 crore. Foreign institutional investors (FIIs) have also demonstrated growing interest. Their stake increased to 3.28% in Q2 FY24, up from 3.14% in Q1.

Business Segments

Fineotex Chemicals operates across three key segments: textile chemicals, cleaning and hygiene, and oil and gas. The textile chemicals division remains the backbone of the company, contributing significantly to its revenue. Meanwhile, the cleaning and hygiene segment launched four years ago, is steadily gaining traction, while the oil and gas division is in its early stages of development.

The company offers over 470 specialty chemicals catering to various phases of the textile value chain, including pre-treatment, dyeing, printing, and finishing. It also produces oil- and water-based drilling fluid chemicals and a diverse range of home care products like detergents, disinfectants, and sanitisers.

Fineotex Chemicals has a wide reach, with over 100 dealers spanning more than 70 countries. Its manufacturing footprint includes three plants-two in Ambernath, Maharashtra, and one in Selangor, Malaysia-with a total installed capacity of 104,000 MTPA. The upcoming Plant 2 in Ambernath, set to be fully operational by April 2025, will add 21 reactors to its production capabilities.

Sustainability and R&D

The company is actively working toward sustainability by adopting renewable energy solutions. It recently commissioned a 100 kWp solar power plant at its Ambernath facility.

Fineotex Chemicals also benefits from the expertise of its Malaysian subsidiary, Biotex, which specializes in high-end textile finishing chemicals like water and oil repellents. Biotex also operates in niche segments of the paint sector.

Its joint venture with Health Guard has expanded its geographic footprint, enabling the introduction of durable antimicrobial and antiviral products to the market.

Analyst Views

In a recent visit to Fineotex's Ambernath facility, Sunidhi Institutional Research highlighted the company's robust operational capabilities and ambitious expansion plans. The brokerage noted that the additional land in Ambernath MIDC positions the company well for future growth.

Fineotex Chemicals raised Rs 340 crore as growth capital and is exploring inorganic expansion opportunities. Analysts project the company to trade at forward P/E multiples of 33x and 27x for FY25E and FY26E, respectively.

Despite its current challenges, Fineotex Chemicals' fundamentals and product portfolio make it a compelling pick for long-term investors. Its established presence in the BSE SmallCap Index, with a market capitalization of Rs 3,730 crore.

Historical Performance

Fineotex Chemicals' stellar performance over the years-delivering over 1,000% returns in the last five years-demonstrates its ability to weather market fluctuations. While the recent downward trend may concern short-term investors, the company's expansion plans, innovation, and institutional backing point toward a promising future.