Finolex Cables Q1 Results Review - A Healthy Quarter; Robust Industry Outlook: Systematix

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Finolex Cables Ltd.'s Q1 (revenue up 19% YoY; 12.2% Ebitda margin) was healthy and in line with expectations, driven by electrical cables (revenue up 22%, 13.1% Ebit margin). Robust traction in wires industry is helping Finolex Cables to grow faster than in its earlier years. While we are upbeat on Finolex Cable’s growth in wires, market-share gains may be tough, as competition is taut among leading players. Communication cables could benefit from 5G rollout. The anti-dumping duty on fiber imposed by Government of India is expected to restore normalcy in realisations and drive margins towards 10% in coming quarters (FY23: 2.2%). A ~Rs 3 billion capex over 18-20 months mainly to boost capacities of fiber preform, auto cables and e-beam cables. Traction in fast moving electrical goods division is low; we are watchful of Finolex Cables’ Rs 5 billion sales guidance in two-three years. We maintain our earnings estimates post Q1 result. After a low 10%/3%/9% compound annual growth rate in revenue/Ebitda/profit after tax over FY18-23, we estimate high 13%/20%/26% CAGR over FY23-25E, factoring in healthy traction in housing demand and 5G roll out. After a ~20% rally in Finolex Cables’ scrip in last two months and at ~20 timesx FY25E price/earning on current market price, we maintain 'Hold' rating with a revised target price of Rs 1,049 (earlier 940), based on 22 times FY25E P/E to the core business at ~14% return on equity and ~23% return on invested capital. Any positive surprise in earnings could further drive a re-rating..Click on the attachment to read the full report:.Finolex Cables Targets Rs 500 Crore Revenue From Appliances Over Three Years.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Finolex Cables Q1 Results Review - A Healthy Quarter; Robust Industry Outlook: Systematix

Robust traction in wires industry is helping Finolex Cables to grow faster than in its earlier years.

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