FinOlex Pipes: The Unusual Brand

“FinOlex is a unique case where a company created a brand out of a commodity business,” says Nemish Shah, co-founder of Enam.

“The dealers had to pay in advance. But what I gave in return was the best quality of pipes,” says Prakash Chhabria, chairman of FinOlex.

FinOlex has transformed its business model from B2B (PVC resin) to B2C (PVC pipes).

FinOlex Industries is the largest manufacturer of PVC pipes, and the second largest manufacturer of PVC resins in India. FinOlex has entered into the CPVC pipes & fittings business. Its products are used in agriculture, housing, telecommunications, construction and industries. Its manufacturing plants are located in Maharashtra and Gujarat.

FinOlex has a wide network of over 700 dealers and 18,000 retail touch points across India. FinOlex has 1250 employees across India.

Value Chain:
finolex-process

FinOlex earns 52% of its revenue from Pipes and fittings, 44% from PVC resin and 4% from Power.

60% of the PVC pipes market is organised. FinOlex has 19% market share in the PVC pipes market. FinOlex’s capacity for pipes and fittings stands at 280,000 MT.

PVC resin is the key raw material for Pipes production. The company’s PVC resin plant has been set up in technical collaboration with Uhde GmbH, Germany with Hoechst technology. FinOlex’s PVC resin capacity stands at 272,000 MT.

CPVC Pipes:
finolex-cpvc

FinOlex and Lubrizol signed an agreement for the manufacture and sale of FinOlex FlowGuard® Plus CPVC pipes and fittings in India. The product will cater to housing and real estate segments. CPVC pipes are priced 25% premium to PVC pipes.

Lubrizol, a Berkshire Hathaway company, is the inventor and largest manufacturers of CPVC resins and compounds worldwide. Lubrizol changed the plumbing industry from metal-based to CPVC-based piping.

“Lubrizol approached FinOlex for a partnership, and we were delighted,” says Prakash Chhabria.

FinOlex has 43MW captive power plant at Ratnagiri.

FinOlex has been awarded India’s most Trusted Brand in the category “Manufacturing – Pipes” by Brand Trust Report.

Opportunity:
Two crore houses will be built by 2022. FinOlex plans to invest ₹30 crore to ₹50 crore a year for the next five years. The company plans to double revenue in 3-4 years.

Investors:
– Promoters hold 52.5% of the company
– Franklin India Fund hold 1% of the company
– DSP Blackrock Fund hold 1.3% of the company

FinOlex Industries holds 15% stake in FinOlex Cables

FinOlex Industries will meet Nalanda Capital on Sep 19, 2017.

Valuation:
Historically FinOlex Industries has traded in the P/E range of 20x to 25x. At current price of ₹650, the stock is available at P/E of 22.8 of its FY17 EPS of 28.59.

finolex-pe

 

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