Finolex Cables hits over 4-yr high; stock up 15% in a week post strong Q3

Shares of Finolex Cables rallied 6 per cent to hit over four-year high of Rs 632.9 in Wednesday’s intra-day trade. With this spike, the stock has climbed 12 per cent in the past two days. It traded at its highest level since June 2018 and had hit a record high level of Rs 750 on January 19, 2018.

In the past one week, the stock of fast moving electrical goods (FMEG) company outperformed market as shares gained 15 per cent after the company reported a good set of numbers for the quarter ended December 2022 (Q3FY23). In comparison, the S&P BSE Sensex was up less than 1 per cent, during the period.

In Q3FY23, Finolex Cables reported 42 per cent year-on-year (YoY) and flat quarter-on-quarter (QoQ) growth in profit after tax of Rs 135 crore, on the back of improved operational performance. Revenues, on the other hand, grew 6 per cent QoQ and 18 per cent YoY at Rs 1,150 crore.  

"The distribution push is beginning to contribute into revenue share improvement. On communication cables segment, most product lines showed volume expansion. Volume of metal-based products improved by 27 per cent during the quarter and optic fiber cable volume grew by over 70 per cent," the company said.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, meanwhile, returned to normalcy at 15 per cent during the quarter, the company said. However, EBITDA margins improved 207 bps sequentially, while down 311 bps YoY.

"The volume growth in new products within the FMEG sector was generally affected by inflationary pressure as well as subdued consumer sentiment and destocking in the case fans due to expected changes in BEE Norms," Finolex Cables said.

Meanwhile, Finolex Cables said that the Union budget 2023 direct benefits to various segment of the company. More development would be seen across the country with a planned capital expenditure of Rs 10 trillion, a YoY increase of 33 per cent, attracting more investors.

"This would improve cash liquidity in the market, benefiting the real estate sector. These changes, therefore, would drive development in infrastructure housing sector, smart city projects, metros & telecommunication sector (5G). Hence, we believe that this is really a great opportunity for Finolex Cables to grow demand of various cables and other products," the management added.