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Finolex Industries Ltd.’s Q2 FY23 result was in-line with our estimate on net sales front, however higher than anticipated inventory loss weighed on margins.
Further, the management guided that Q3 FY23 will also witness spill over effect of decline in raw material prices.
On a positive note, the demand has improved owing to price correction. Net sales declined by 13.1% YoY to Rs 9.4 billion, while Ebitda came in at negative Rs 1.4 billion.
Finolex reported adjusted net loss of Rs 954 million compared to net profit of Rs 2.3 billion in Q2 FY22. Given subdued performance of Q2 and weak outlook for Q3, we have cut our Ebitda/profit after tax estimates by 27%/22% and 23%/17% over FY23E/FY24E respectively.
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