Target: ₹1,031
CMP: ₹851.35
Finolex Cables delivered a steady 13.4 per cent y-o-y Q1 revenue growth led by electrical volumes up 16 per cent y-o-y, though margins were pressured by a weaker mix with higher project sales and subdued agri-wire demand.
Communication cables were muted, but backwards integration through the new preform facility should aid profitability ahead. With wire demand expected to revive from Q3 on real-estate completions and Bharat Net Phase-3 providing near-term assurance, earnings recovery is likely as operating leverage and mix improve. Commissioning of the preform (key raw material for optical-fibre cables) plant reduces reliance on imports, enhances value-addition, and provides optionality to sell surplus preforms in the market.
Post Q1, we tweak our FY26e/27e EBITDA by 9/10 per cent and PAT by 11/9 per cent. We model 12/11 per cent revenue/net income CAGRs over FY25-28, which could result in the return ratio expanding. We introduce FY28 and roll over valuations to Sep’27. We retain a Buy, with a 12-month target price of ₹1,031 (₹1,293 earlier) on a sum-of-parts approach.
Risks: Fluctuation in RM prices could dent margins, and a sharp compression in Finolex Industries’ profitability could squeeze its net income. Timely capex commissioning and backwards integration are critical to margin expansion in FY26/27.
Published on August 21, 2025
