Accumulate Finolex Cables Ltd For Target Rs.1,494 By Geojit Financial Services Ltd
Riding Fibre Wave...Growth Story Intact
Finolex Cables Ltd. (FCL) manufactures electrical (80% of revenue) and telecommunication cables (16%). Its edge comes from backward integration in copper and PVC, a wide distribution network, and strong brand recall.
* Revenue grew 44% YoY on broad-based volumes. Electrical Cables rose 47% YoY, led by high double-digit growth in Auto, Solar, Agri and Flexibles, while Building Wire stayed muted on channel de-stocking. Communication Cables outperformed (+62% YoY) on ~30% OFC volume growth and firm fiber realizations; Copper Rod was hit by a temporary LPG-led plant shutdown. * EBITDA grew 90% YoY, with margins expanding ~294 bps YoY to 12.3%, led by operating leverage, a favorable product mix and copper cost pass-through. PAT grew 59% YoY. • Demand visibility remains healthy, underpinned by real estate, government capex and a data-center-led fiber upcycle, with exports emerging as a key incremental lever. The ramp-up in construction wire utilization and premium segments is expected to drive further operating leverage.
* Management guides to margins of 11–12%, supported by higher capacity utilisation, the E-Beam product ramp-up in premium segments, and a doubling of OFC capacity to 8mn km by Q2FY27.
* We raise our FY27E/FY28E EPS by 6.8%/5.3%, factoring in improved growth visibility in optic fibre—driven by data-centre and telecom-led OFC demand alongside healthy demand across the broader product portfolio.
Outlook & Valuation
We expect Finolex Cables (FCL) to deliver earnings growth at a CAGR of ~19.0% over FY26–FY28E, supported by healthy demand from the real estate and construction sectors, power T&D, renewables, data centres and exports. We value FCL’s core business at 24x FY28E P/E and its stake in Finolex Industries at Rs.113, arriving at a SOTP-based target price of Rs.1,494. However, given input price volatility and a sharp run-up in stock prices, we maintain Accumulate rating.
Key Concall Highlights
* Standard G.652.D fibre prices rose from ~$5–6 (Dec-25) to $17–18, now settling at ~$11–13/km; premium/high-count variants are far higher (some exports done at ~$25/km), driven by a global AI/data-centre-led shortage likely to persist in the near term.
* Management sees robust communication and power cable demand over the next 2-3 years, driven by data-centre/AI-led fibre demand and large-scale investments. It has accelerated fibre capacity expansion and is strengthening R&D for higher-fibre-count designs, already exporting fibre and data-centre cables to the US/Europe, with active customer engagement to scale up further.
* Preform plant commissioned (equiv. ~4mn km fibre, ~100% for captive consumption); stabilization over the next couple of months, with margin benefit accruing from Q3FY27. The balance preform is still to be sourced externally.
* OFC capacity ramp accelerated, draw capacity moving from 4 to 8mn km in one go to be completed by Sep-26; cabling to expand 8-10mn km (later). At 8mn km and ~$11/km, fiber-only revenue potential ~$88mn, with 25–30% value-add if cabled.
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