Finolex Cables has been given a "Buy" rating by Sharekhan, with a target price of Rs 1,300.
The company's Q2 results showed a 10.5% increase in revenues, but operating profit margins fell to 8.1% from 12.3% due to factors such as fluctuating copper prices, high-cost inventory, and channel destocking.
The revenue breakdown indicates that electric cables, communication cables, copper rods, and FMEG generated Rs 1,104 crore, Rs 135 crore, Rs 349 crore, and Rs 60 crore, respectively, with year-on-year growth rates of 12%, -0.8%, -22%, and 10%.
Finolex plans to invest Rs 500 crore in capital expenditures over the next two years, with a significant portion of Rs 350-400 crore allocated for FY25.
The company is also awaiting regulatory approvals for its E-beam facility, which is expected to start operations soon.
With a strong presence in the cables and wires segment, Finolex is well-positioned for long-term growth, especially in the underpenetrated optic fiber cable market in India.
Currently, the stock is valued at 18 times FY27 earnings.