Target: ₹6,400
CMP: ₹5,420.80
Fine Organics Americas, a 100 per cent subsidiary of Fine Organic Industries, has acquired about 160 acres in South Carolina (the US) to set up a full-scale manufacturing facility. This expansion would strengthen its US presence, enhance service for existing clients and unlock new growth opportunities.
While volume growth is expected to remain muted until FY27, the company is well-positioned for a strong scale-up once the SEZ and US capacities come onstream. Although the management hasn’t disclosed the capex for the US facility, we expect it to be sizeable, given the land parcel is over 5x the total area of existing plants.
Development will likely be phased, but the scale adequately supports long-term growth potential. We retain our Buy rating and raise our target price to ₹6,400 (earlier ₹5,200) as we roll forward to September 2027, applying a higher multiple of 37x (vs. 33x FY27) on the back of improvement in growth visibility and resolution of recent growth concerns. Strong strategic initiatives, including SEZ and US expansions, offer meaningful earnings re-rating potential.
Risks: Execution Risk in US Expansion; timely execution of JNPA SEZ plant; volatility in input prices.
Published on July 17, 2025