FINCABLES - Finolex Cables Ltd. Share Price

During the earnings call on June 2, 2025, Finolex Cables management provided an optimistic outlook for the company. They reported a 14% growth quarter-on-quarter and a significant 35% increase compared to the preceding quarter, with a profit before tax of INR 208 crores, marking the highest quarterly profit to date.

Management indicated that while margins faced pressure due to volatility in commodity prices over the year, they expect to recover from these pressures. They anticipate that "most of the margin pressure-related issues are behind us," indicating gradual improvement in margins moving forward.

Key forward-looking points include:

1. E-Beam Products: The newly launched e-beam products for the construction sector and solar applications are projected to contribute INR 500-600 crores in revenue annually once fully operational. Their premium wire product is expected to have a life of at least 25 years.

2. Capital Expenditure: Finolex's capex was INR 236 crores for FY '25, with plans to complete the remaining portion of a previously announced INR 500 crores capex plan in the current fiscal year.

3. BharatNet Opportunity: The BharatNet project presents a significant potential business opportunity, even though the company did not win bids directly. Existing winners are in discussions for sourcing their requirements.

4. Optical Fiber Capacity: Production trials for the preform facility are expected to begin shortly, with a target to ramp up utilization to 60%-70% by the second year, leading to anticipated margin improvements as production scales.

5. Market Growth: The market for Extra High Voltage (EHV) cables is expected to grow from $500 million towards a potential $2 billion, supported by a growing emphasis on renewable energies and related infrastructure.

Overall, management conveyed a positive outlook, highlighting expected growth in demand and improved margins throughout FY '26 and beyond.

1. Question: Could you please elaborate on the commercial potential and the margin profile of the e-beam products which were launched during the year? Also, any guidance for capex and an update on the BharatNet opportunity?

   Answer: We expect the e-beam project's revenue to be around INR500 to INR600 crores at full steam. Currently, pricing is attractive; however, exact margin profiles are yet to be determined as we need to assess demand in the next few months. Capex for FY '24 was INR236 crores, with a total of INR500 crores planned over two years. For BharatNet, although our consortium lost bids, we're engaged with winning bidders for potential business.

2. Question: What exactly have you changed in the production mix?

   Answer: While construction wire still dominates sales, we've seen a shift from standalone sales to project sales. The latter offers lower pricing due to discounts, thus altering our sales composition more towards projects than in the past few years.

3. Question: How do you see demand for wires trending compared to cables?

   Answer: We acknowledge that wire demand has been growing slower than cable demand. We anticipate a revival in wire demand in FY '26, particularly in the second half, as new projects near completion. The stability in the market should support growth moving forward.

4. Question: Could you quantify pricing actions taken in Q4 and any changes since April?

   Answer: In FY '25, wire prices were revised 12 times due to commodity price fluctuations, resulting in a cost increase of around 12.5-13%. Recently, we implemented a 3% price increase, reflecting current market conditions.

5. Question: What are the prospects for the EHV segment?

   Answer: The EHV segment is projected to grow from a current market size of about $400-$500 million to a potential $1.5-$2 billion. We see a decent level of orders ahead, given the long lead times in the business.

6. Question: Can you update us on the optic fiber capacity and pricing?

   Answer: Our preform facility is ready, with production trials expected to start soon. Fiber capacity is set to increase from 4 million to 6 million kilometers later this year. As for prices, they've firmed up from $2.5 to about $3.5 per kilometer, signaling positive market conditions.

7. Question: What percentage of revenue currently comes from the EHV segment, and what is your market share?

   Answer: Our EHV activities are through a JV, impacting our standalone results. Market share for EHV is not precisely tracked, but it's healthy as we grow with expanding orders. Total market size for EHV is around $500 million.

8. Question: Are you targeting any export markets?

   Answer: Traditionally, we have not targeted exports due to supplier agreements. However, now that we're producing our own products, we may consider entering international markets.