Motilal Oswal's Shocking Sell Call on Fine Organic: Target Price Slashed to INR 3820 - Should You Exit Now?

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Updated on 12 Nov 2025, 03:37 pm

Motilal Oswal's latest research report on Fine Organic Industries (FINEORG) indicates a subdued operating performance, marked by a 10% year-over-year decline in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). The report highlights a contraction in gross margins by 120 basis points to 41.6%, alongside an increase in employee and other expenses.

Concurrently, Fine Organic Industries is pursuing significant global expansion. The company has established a wholly-owned subsidiary, Fine Organics Americas LLC, in the United States, with concrete plans to set up a manufacturing facility. This strategic move is further supported by the acquisition of approximately 159.9 acres of land in Jonesville, South Carolina, aimed at bolstering future expansion and manufacturing capabilities.

Despite these expansionary efforts, Motilal Oswal has largely maintained its earnings estimates for fiscal years 2026, 2027, and 2028, projecting a Compound Annual Growth Rate (CAGR) of 9% for revenue, EBITDA, and Profit After Tax (PAT) over the FY25-FY28 period. However, the brokerage firm currently values the stock at 27 times its FY27 Estimated Earnings Per Share (EPS), leading to a target price of INR 3820. This valuation comes as the stock trades at approximately 32 times its FY27 Estimated EPS and 25 times its FY27 Estimated Enterprise Value to EBITDA (EV/EBITDA).

Impact This 'Sell' recommendation from a prominent analyst firm could exert downward pressure on Fine Organic Industries' stock price. Investors may re-evaluate their positions, especially given the target price of INR 3820, which suggests potential downside from current levels. The market's reaction will hinge on the balance between the company's strategic expansion plans and its current operational challenges, as interpreted by the brokerage's valuation metrics. Impact Rating: 7/10

Difficult Terms * **EBITDA**: Earnings Before Interest, Taxes, Depreciation, and Amortization. It measures a company's operating profitability before accounting for financing, taxes, and non-cash charges. * **CAGR**: Compound Annual Growth Rate. It represents the average annual growth rate of an investment over a specified period longer than one year, assuming profits are reinvested. * **PAT**: Profit After Tax. This is the net profit remaining after all expenses, including taxes, have been deducted from the company's total revenues. * **EPS**: Earnings Per Share. It indicates the portion of a company's profit that is allocated to each outstanding share of common stock, serving as a key indicator of profitability. * **EV/EBITDA**: Enterprise Value to EBITDA. A valuation multiple used to compare companies within the same industry. Enterprise Value includes market capitalization, debt, minority interest, and preferred shares, minus total cash and cash equivalents.