Mirae Asset Sharekhan has reiterated its Buy recommendation for Finolex Cables Ltd (NSE: FINCABLES), setting a revised price target of Rs 1,250, which represents a robust upside from the current market price of Rs 963. The research highlights a mixed performance in Q4FY2025, with revenue growth offset by margin pressure due to volatile commodity prices and a shift in product mix. Key positives include strong leadership in India’s Rs 90,000 crore cables market, a debt-free balance sheet, and emerging opportunities in optic fiber cables, particularly through government initiatives like Bharat Net. The company’s strategic capex and healthy cash flows further bolster its long-term growth prospects.

Company Overview and Market Position

Finolex Cables Ltd stands as a dominant force within India’s electrical and communication cables sector, boasting a market capitalization of Rs 14,850 crore and a 52-week trading range between Rs 720 and Rs 1,700. The firm’s product suite spans electric cables, communication cables, copper rods, and FMEG (fans, motors, and electrical goods), with the electric cables segment driving the bulk of recent revenue momentum. Finolex’s reputation as a sector leader is underpinned by a robust brand, a strong balance sheet, and a diversified shareholder base, including notable institutional investors.

Recent Financial Performance: A Mixed Bag

The company’s Q4FY2025 results painted a nuanced picture. Revenue surged 13.8% year-on-year to Rs 1,595 crore, buoyed by a 16% jump in electric cables sales. However, operating margins contracted by 84 basis points to 10.7%, pressured by volatile copper prices, high-cost inventory, and a shift toward project-based sales with higher discounts. Communication cables saw a 4% revenue decline, despite a 30% volume increase in optic fiber cables, as price erosion in the fiber segment muted topline growth. The FMEG segment, though a smaller contributor, posted a 2% revenue increase, driven by new product launches.

Key Growth Drivers and Strategic Initiatives

Electric Cables: This segment remains the linchpin of Finolex’s growth story, with management reporting 15% volume growth and 16% revenue growth year-on-year. The company’s ability to revise prices 12 times in response to commodity volatility underscores its pricing power and operational agility.

Optic Fiber Cables (OFC): Despite near-term softness, Finolex is well-positioned to capitalize on India’s underpenetrated broadband market. The government’s Bharat Net Phase III tenders are expected to unlock substantial order flow, with management anticipating a revival in demand from H2FY26.

FMEG Expansion: The company has introduced new products, including fans, water heaters, and conduit pipes, and expects these to contribute meaningfully as the supply chain matures.

Capex and Capacity: Finolex invested Rs 236 crore in FY25 and plans an additional Rs 150 crore in FY26. The commissioning of the e-beam facility and the introduction of solar and real estate-focused products are expected to generate Rs 500 crore in incremental revenue at full capacity.

Management Commentary and Forward-Looking Statements

Management remains optimistic about the long-term growth trajectory, citing robust demand from the construction and infrastructure sectors. The company has maintained tight working capital management, with a policy of advance payments from dealers, and continues to generate healthy operating cash flows. Finolex is also exploring inorganic opportunities to expand its product portfolio and market reach. The management expects the EHV (extra high voltage) market to expand from $400 million to $2 billion, though project lead times remain lengthy at 18-20 months.

Valuation and Investment Rationale

Finolex trades at 19 times FY27 earnings, a valuation that Mirae Asset Sharekhan views as attractive given the company’s growth prospects and sector leadership. The research house highlights the following valuation metrics:

Mirae Asset Sharekhan’s Buy call is anchored in the expectation that Finolex’s valuation multiple will narrow relative to peers as growth accelerates and margins stabilize. The research house also cites the company’s debt-free status and strong cash position as key risk mitigants.

Industry Outlook: Structural Tailwinds

The Indian cables and wires market, estimated at Rs 68,000–73,000 crore in FY2023, is projected to expand to Rs 90,000–95,000 crore by FY2026. This growth is fueled by robust demand from power, railways, infrastructure, oil and gas, telecom, real estate, renewables, defense, and automotive sectors. The government’s Rs 111 lakh crore infrastructure capex plan through FY2025 is expected to further catalyze demand. Organized players, including Finolex, command a 70% market share, with unorganized players dominating rural markets.

Key Risks and Considerations

Commodity Price Volatility: Any sharp movement in copper prices could pressure margins in the near term.

Segment-Specific Weakness: Soft demand in the FMEG segment or inflationary pressures could dampen earnings momentum.

Execution Risks: Delays in government tenders or project execution could impact revenue visibility.

Despite these risks, Mirae Asset Sharekhan remains confident in Finolex’s ability to navigate challenges and deliver sustained growth.

Shareholding and Ownership Structure

Finolex’s shareholder base is well-diversified, with promoters holding 35.9%, FIIs 10.6%, DIIs 16.1%, and others 37.5%. The top institutional shareholders include Nippon Life India Asset Management, Tata AIA Life Insurance, and L&T Mutual Fund Trustee Ltd, reflecting strong institutional confidence in the company’s prospects.

Technical and Fundamental Levels

For investors seeking actionable levels, the stock currently trades at Rs 963, with Mirae Asset Sharekhan’s revised target at Rs 1,250. The 52-week range is Rs 720–1,700, providing a wide trading band. Key support and resistance levels should be monitored, particularly in light of recent price performance:

Bottomline: Why Finolex Cables Deserves a Place in Your Portfolio

Mirae Asset Sharekhan’s Buy rating and Rs 1,250 price target underscore the compelling investment case for Finolex Cables. The company’s leadership in a structurally growing market, a debt-free balance sheet, and emerging opportunities in optic fiber cables position it for sustained outperformance. While near-term margin pressures persist, the long-term growth trajectory remains robust, supported by government initiatives, strategic capex, and a diversified product portfolio. For investors with a medium- to long-term horizon, Finolex Cables offers an attractive risk-reward profile at current levels