Finolex Cables Hits More Than 3-Decade High, Shares Up 55% in 1 Month

Shares of Finolex Cables rose 9% today to hit a new 52-week high on heavy volume.

Finolex Cables (FCL) shares hit a more than three-year high of Rs 847.60, surging 10% on the BSE in intraday trade on Monday as trading volumes surged on expectations of a strong business outlook. The cable company’s shares were trading at their highest level since March 1992. According to BSE data, it hit an all-time high of Rs 875 on March 24, 1992.

FCL is India’s largest manufacturer of electrical (80% of revenue) and telecom cables (16% of revenue). FCL has an extensive distribution network and high brand recall.

FCL’s shares have risen 55% in the past month after the company reported good numbers for the quarter ending December 2022 (Q3FY23). In comparison, the S&P BSE Sensex lost 0.18% during the period. The stock has soared 85% over the past six months, with a 2% gain for the benchmark index.

Meanwhile, FCL said the 2023 Union Budget directly benefits various parts of the company. With a planned capex of Rs 10 trillion, up 33% year-on-year, it will see more developments across the country attracting more investors.

“This will improve the cash liquidity of the market, which will benefit the real estate sector. So these changes will drive the infrastructure housing sector, smart city projects, subways and the telecom sector (5G). So, we think it is a good opportunity for Finolex Cables to increase demand for various cables and other products,” management added.

In Q3FY23, FCL, a fast-moving electronics goods (FMEG), posted a 42% YoY profit after a tax increase of Rs 135 crore QoQ on improved operational performance. Conversely, revenue rose 6% quarter-on-quarter and 18% year-on-year to Rs 1,150 crore.

“The distribution push is starting to help improve revenue share. In communications cables, most product lines saw volume expansion. Metal-based product sales were up 27% in the quarter, and fibre optic cable sales were up more than 70%,” the company said.

Meanwhile, the company said its EBITDA margin returned to normal at 15% in the quarter. However, the EBITDA margin improved by 207 basis points quarter-over-quarter and decreased by 311 basis points year-over-year.

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