Finolex Cables Limited — Q1 FY26 earnings call

Call held 14 Aug 2025

Management summary

Finolex Cables delivered steady top-line and bottom-line growth of 13% in Q1 FY26, supported by strong volume growth in the electrical segment. However, profitability faced headwinds from a shifting product mix toward lower-margin project sales and increased competitive intensity in the wire segment. Management is aggressively investing in backward integration for fiber and expanding its retail footprint to counter these pressures.

Highlights

  • Revenue reached just under ₹1,400 crores, representing a 13% YoY growth.

  • PAT grew by approximately 13% YoY, tracking in line with revenue growth.

  • Electrical segment volumes increased by 16%, driven primarily by power cables.

  • Gross margins remained stable at approximately 20% compared to the previous year.

  • Retail 'box' sales mix declined from 75-80% to approximately 60%, impacting overall margins.

  • Ad and promotion spends nearly doubled to ₹20 crores from ₹11 crores in the previous year.

  • Total FY26 capex is planned at ₹300 crores, with a significant portion allocated to the fiber business.

  • FMEG portfolio reached approximately ₹250 crores in FY25, though growth remains below internal targets.

Concerns

  • Product Mix Shift to Projects

Key financials

  1. Revenue ₹1,400 Cr +13%YoY
  2. PAT — +13%YoY
  3. Gross Margin 20%
  4. Ad and Promotion Spend ₹20 Cr +81.8%YoY

What they filed

Q1 FY27: revenue up 44.2%, net profit up 59.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,312 1,182 1,595 1,396 1,376 +5%1,599 +35%1,951 +22%2,013 +44%
EBITDA99 129 166 131 143 +44%153 +19%203 +22%248 +89%
Net profit146 124 152 139 187 +28%136 +10%161 +6%221 +59%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Electrical Segment
    16% Volume Growth₹6,500 Cr Potential Turnover8× Asset Turn
  • Communication Cables
    2% EBIT Margin
  • FMEG
    ₹250 Cr FY25 Revenue

Guidance & targets

Margin

  • Segment EBITDA Margin Margin · next 2-3 quarters · Medium confidence 12%
    I would like to see my segment margins around 12%, but that has not been the case over the last 2 quarters... I think another couple of quarters before we reach that.

    — Mahesh Viswanathan, Deputy CEO & CFO

Capex

  • Total Annual Capex Capex · FY26 · High confidence ₹300 crores
    Including -- it should be around INR 300 crore, I think.

    — Mahesh Viswanathan, Deputy CEO & CFO

  • Fiber Business Investment Capex · FY26 · High confidence ₹325-350 crores
    Currently, we announced a program of INR 500 crore, out of which about INR 325 crore to INR 350 crore would go on the fiber business... It should be over by this fiscal.

    — Mahesh Viswanathan, Deputy CEO & CFO

Capacity

  • Electrical Segment Potential Turnover Capacity · Medium Term · Medium confidence ₹6,500 crores
    At current prices could go up to INR 6,500 crore.

    — Mahesh Viswanathan, Deputy CEO & CFO

Risks & concerns

  • Product Mix Shift to Projects

    high

    Project sales are at deep discounts compared to retail 'box' products, diluting margins by 4-5 percentage points.

    Management acknowledged

  • Copper Price Volatility

    medium

    Market resistance to immediate price hikes during copper spikes creates temporary margin pressure.

    Analyst acknowledged

  • FMEG Underperformance

    medium

    Growth in FMEG has been much lower than expected due to dependency on third-party sourcing and price erosion in lighting.

    Both acknowledged

  • Fiber Dumping from China

    medium

    Large-scale availability of dumped fiber from China has depressed global and domestic prices despite anti-dumping duties.

    Management acknowledged

Areas of evasion (2)

  • Absolute numbers for cables vs wires for the quarter (claimed not to have them in front of him).
  • Specific value of cable required per megawatt for data centers.

Q&A highlights

2 direct
EBIT growth vs Volume growth discrepancy Direct
The product mix and this is a trend that we've been seeing over the last few quarters. There is more of sales towards project and those are at discounted prices.

Explains why strong 16% volume growth only translated to a 1.5% jump in segment EBIT, highlighting margin dilution from project-heavy sales.

Asked by Vidit Trivedi

Long-term underperformance vs industry peers Partial
In terms of the growth, I think we have been quite subdued on the power cable side, whereas all our peers have grown substantially on that side.

Management acknowledges they missed the 'growth explosion' in power cables that peers captured, while facing aggressive pricing in their core wire segment.

Asked by Manoj Gori

Retail vs Project Mix Shift Direct
Well, there used to be a time when retail sales for retail in a sense, the box sales used to be close to 75% - 80%. Now that has dropped to about 60%, I think.

Quantifies the structural shift in the sales channel which is the primary driver of current margin pressure.

Asked by Achal Lohade

1 min read 5 chapters

Detailed narrative

Margin Dilution via Channel Mix Shift

The company is experiencing a significant shift in its sales mix, with retail 'box' sales dropping from a historical 75-80% to approximately 60% of revenue. This shift toward project-based sales, which are sold at deep discounts, has resulted in a 4-5 percentage point hit to margins. Management expects this pressure to persist for at least another two quarters before stabilizing.

Strategic Capex and Backward Integration

Finolex is executing a ₹300 crore capex plan for FY26, with ₹325-350 crores of a larger ₹500 crore program dedicated to the fiber business. A key focus is the new preform facility, which aims to eliminate dependence on imports and improve margins through value addition. The e-beam facility is also ramping up, with cured products available since March 2025.

Electrical Segment Capacity and Growth

Despite competitive pressures, the electrical segment saw 16% volume growth. Management highlighted that the current gross block of ₹700-750 crores can support a potential turnover of ₹6,500 crores, implying significant headroom for growth without massive greenfield expansion. Utilization is improving as the company selectively takes on utility-side exposure.

FMEG and Lighting Sector Headwinds

The FMEG portfolio, which reached ₹250 crores in FY25, continues to underperform internal targets. The lighting sector specifically faces 'enormous' price erosion, which has neutralized volume growth. To counter this, the company is expanding its retail footprint and moving toward in-house design to reduce dependency on third-party sources.

Communication Segment Awaits Government Orders

The communication cables segment remains stagnant with margins of 1-2% due to slow execution of government programs like BharatNet Phase 3. While tenders have been won by various parties, Finolex expects orders for cable supply to flow in toward the end of the year after a 2-3 month prep time for electronics procurement.

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