Finolex Cables Ltd Q3 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
N/A
Order
Yes
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 3- Revenue growth was 6% YoY and 3% QoQ in the recent quarter; 11% growth over 9 months.
- Electrical cable volume growth is about 8%; communication cables volumes were flat or decreased due to BharatNet tender delay.
- BharatNet tender expected to be floated soon, with revenue flow from Q1 or Q2 FY25.
- Demand for fiber expected to rise beyond 35-40 million km, potentially reaching 50 million km as 5G and other projects roll out.
- Construction activity shows slight dip but overall positive; mid-teens volume growth for wires segment feasible in FY25.
- Capacity utilization at ~65-70%, with no immediate bottlenecks to handle 15% additional volume growth.
- Market share stable at ~23-24% in wires; competition intense but price-based competition not sustainable.
- Long-term fiber demand expected to grow strongly, supported by government projects and increasing use cases.
See what Finolex Cables Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
- There is no explicit mention in the transcript of any current or future fundraising plans through debt or equity.
- The company is focused on capital expenditure for capacity expansion, particularly in optical fiber, preform production, and e-beam insulation compounding plants.
- Capex plans are being funded internally as there is no indication of external fundraising.
- The discussion mentions readiness for future demand growth but no reference to raising new funds.
- No update on litigation or financial restructuring that might suggest fundraising needs was provided.
See what Finolex Cables Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- Expanding fiber draw capacity from 4 million kilometers to 8 million over 2 years.
- Setting up a preform plant (Phase 1) expected to produce about 100 tons annually, translating to 4.5-5 million kilometers of fiber; production to start by end of Q2 or early Q3 next financial year.
- Additional cabling capacity expansion planned to handle increased fiber output.
- E-beam building completed; first equipment delivery expected mid-February, production starting Q1 next year; second equipment delivery in May with commissioning expected 2 months later.
- Setting up insulation compound plant for e-beam process compound production by year-end to reduce dependency on third-party compounds.
- Compounding plant being set up in Goa for own insulation needs, with construction and equipment pending permissions, expected by fiscal year-end.
- Auto cable capacity expansion underway in Roorkee, with equipment arrival expected July-August this year.
Track Finolex Cables Ltd — get its next earnings analysis in your feed
Margin guidance
Category 3- Volume growth in electrical wires expected to accelerate, with mid-teens percentage growth possible in FY '25 due to construction projects nearing completion.
- Optical fiber capacity expansion aligns with anticipated significant demand increase from government projects like BharatNet and 5G rollouts; fiber consumption in India expected to rise from ~20 million km to 50 million km eventually.
- Margins in cable and wire business currently around 12-14%; focus on backward integration (making preforms in-house) may improve margins to double digits at 70-75% capacity utilization.
- Margin pressure due to product mix (increased auto/agri cables with lower margins) may normalize with stabilization of product mix.
- Advertising and marketing spend increased to around INR 50 crores to drive growth.
- Overall, the company anticipates higher volume and revenue growth in FY '25 with stable operating margins, barring major economic disruptions.
Order book
Yes- A major tender related to BharatNet involving approximately 650,000 kilometers of cables and around 25 million kilometers of fiber is imminent; expected to be floated within a week.
- The tender award process could take 2-3 months post submission, with revenue likely to start flowing from Q2 FY25.
- The project is a 3-year program with large and smaller packages.
- Currently, there's no government business or major tenders during the past 9 months except a small one (~10,000-15,000 kilometers).
- Reliance is buying small fiber count cables primarily for 5G rollouts; Bharti's contract process has been delayed and involved multiple rounds of reverse auctions.
- The communication cable segment revenue has been low due to the absence of large government or private orders but is expected to improve with the new tender.
- The company has already invested in capacity expansion in optical fiber anticipating increased demand once the tender is awarded.
How does Finolex Cables Ltd rank vs peers in Industrial Products?
Pro featureHow does Finolex Cables Ltd rank in Industrial Products?
Compare Finolex Cables Ltd against every Industrial Products company (Q3 FY24) on revenue, margins and earnings-call signals.
Continue your research
What Finolex Cables Ltd's management said in earlier quarters
Others in Industrial Products this season
- Rathi Steel & Power Ltd (Q1 FY27)
PAT growth seen with recent quarters growing by ~85% YoY, indicating strong earnings momentum. Key concall takeaways from Rathi Steel & Power Ltd's Q1 FY27…
- SKP Bearing Industries Ltd (Q1 FY27)
SKP is steadily increasing capacity from about 80-100 tons earlier to around 1,800 tons now, operating at ~80% utilization (Page 20). Key concall takeaways…
- Mitsu Chem Plast Ltd (Q1 FY27)
Q1 FY27 showed strong profitability with EBITDA margin improving to 16.29% and net profit margin to 9.18%. Key concall takeaways from Mitsu Chem Plast Ltd's Q1…
- Simplex Castings Ltd (Q1 FY27)
Current capacity expansion planned for 300-350 crores revenue, further growth through organic or inorganic expansion. Key concall takeaways from Simplex…