FINCABLES - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.9

📊 Financial Overview: Finolex Cables (FINCABLES) maintains a strong financial profile with a market cap of ₹12,016 Cr and a debt-free balance sheet (debt-to-equity: 0.00). Return metrics are solid, with ROCE at 16.2% and ROE at 12.4%. Quarterly PAT declined slightly from ₹152 Cr to ₹139 Cr, but overall profitability remains healthy with a 13.3% quarterly profit variation.

💹 Valuation Metrics: The stock trades at a P/E of 21.4, below the industry average of 24.5, suggesting fair valuation. With a Book Value of ₹301, the P/B ratio is ~2.61. The PEG ratio of 2.05 indicates moderate overvaluation relative to growth. Dividend yield stands at a respectable 1.01%.

🏭 Business Model & Competitive Advantage: Finolex Cables is a leading manufacturer of electrical and communication cables, with diversified exposure to power, telecom, and infrastructure sectors. Its strong brand equity, wide distribution network, and consistent product quality offer a durable competitive advantage. The company also benefits from its expansion into lighting and switchgear segments.

📈 Technical Indicators: RSI at 41.5 suggests the stock is approaching oversold territory. MACD at -10.7 indicates bearish momentum. The stock is trading below both its 50 DMA (₹823) and 200 DMA (₹924), signaling short-term weakness. Volume is slightly above average, indicating active investor interest.

🎯 Entry Zone: A favorable entry range would be around ₹740–₹760, closer to the recent low and below moving averages, offering a better risk-reward setup.

🕰️ Long-Term Holding Guidance: Finolex Cables is a fundamentally sound company with strong returns, zero debt, and a stable business model. Long-term investors can consider accumulating on dips for steady growth and moderate income.

✅ Positive

• Debt-free balance sheet enhances financial flexibility.
• Strong ROCE (16.2%) and ROE (12.4%) reflect efficient capital usage.
• EPS of ₹36.7 supports consistent earnings performance.
• Dividend yield of 1.01% adds income appeal.

⚠️ Limitation

• PEG ratio of 2.05 suggests moderate overvaluation.
• Quarterly PAT declined from ₹152 Cr to ₹139 Cr.
• FII holding dropped by 0.77%, indicating reduced foreign interest.

📉 Company Negative News

• MACD and RSI suggest short-term bearish sentiment.
• Stock has corrected significantly from its 52-week high of ₹1,343.

📈 Company Positive News

• DII holding increased by 0.31%, reflecting domestic institutional confidence.
• Volume remains strong, indicating sustained investor interest.

🏭 Industry

• Cable and wire industry benefits from infrastructure, power, and telecom expansion.
• Industry P/E of 24.5 suggests moderate valuation across peers.

🧾 Conclusion

• Finolex Cables is a financially sound, debt-free company with strong returns and brand strength.
• Valuation is fair; consider accumulating near ₹740–₹760.
• Ideal for long-term investors seeking stable growth and exposure to infrastructure-linked sectors.