 "Finolex")
Shares of Finolex Cables hit a record high of Rs 1,361.95, as they zoomed 19 per cent on the BSE in Friday’s intra-day trade amid heavy volumes after the company reported a healthy operational performance for the March quarter (Q4FY24). The board also recommended a dividend of 400 per cent i.e. Rs 8 per share on face value of Rs 2.
In the past three trading days, the stock of India's largest and leading manufacturer of electrical and communication cables maker has rallied 29 per cent. At 10:56 am; the stock was trading 17 per cent higher at Rs 1,337.25, as compared to 0.02 per cent rise in the S&P BSE Sensex. The average trading volumes at the counter jumped over eight-fold. A combined 4.7 million equity shares representing 3.1 per cent of total equity of Finolex Cables had changed hands on the NSE and BSE.
In Q4FY24, the company’s profit before taxes grew 13 per cent year-on-year (YoY) to Rs 196.1 crore on back of volume led growth in the major segments, new product introductions as well as some pricing actions to maintain margins.
Revenue rose 15 per cent YoY to Rs 1,401 crore from Rs 1,224 crore a year ago. Profit after tax was up 9 per cent YoY to Rs 146 crore.
In volume terms, Electrical Wires increased by 15 per cent compared to Q4FY23, while Cables improved by 50 per cent. Within the Communication Cables segment, most product lines increased in volume, by an average of 14 per cent.
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Volumes in new products within the fast moving electric goods (FMEG) sector all showed a healthy growth from the corresponding quarter. While all products contributed to positive margins, lighting products continued to be affected by price erosion, Finolex Cables said.
The management said the previously announced plans to set up an E-Beam facility and Preform manufacturing plant are progressing well. The first of the E-Beam equipment is currently under commissioning and is expected to be in production shortly; the second equipment is expected to arrive in the next few weeks. It is expected that market offering should start by August/September 2024. As reported earlier, Phase I of the Preform facility should be operational by Jan/Feb 2025, the management said.
The rebound in economic activity and growing infrastructure development are unfolding tremendous opportunities in the wires and cables sector. With the domestic demand improving due to revival in consumer sentiment and spending coupled with higher market penetration, the FMEG segment is set for a sustained growth trajectory, Finolex Cables had said in its FY23 annual report.
Finolex Cables mainly operates in the electrical cables and telecommunication (telecom) cables segments. Improved geographic reach in northern and eastern India, following the expansion of the Roorkee plant, should support the electrical cables business. The communication cables segment, after facing some pressure in the recent past, is likely to grow in the near to medium term, backed by healthy demand for the rollout of 5G services in the country, according to analysts.
CRISIL Ratings believes Finolex Cables will maintain its stable business risk profile over the medium term, driven by its dominant position in the electrical cables segment. Financial risk profile should also remain healthy, supported by the comfortable capital structure and sufficient cash accrual.
