Finolex Cables Q1 FY26: Cracking the Code of Double-Digit Growth & Future Challenges
Finolex Cables Limited (FINCABLES) has just unveiled its performance for the first quarter of Financial Year 2026 (Q1 FY26), ending June 30, 2025. As India’s economy continues to lean into domestic growth themes like infrastructure and manufacturing, let’s peel back the layers of Finolex Cables’ latest numbers to see how they stack up and what they signal for the quarters ahead.
The broad market narrative in India has been one of robust domestic demand, supported by continued government thrust on infrastructure and easing inflation. While the broader Nifty and Sensex enjoyed a strong Q1 rally, a recent July correction hints at underlying caution. For a player like Finolex Cables, deeply embedded in the ‘capital goods’ and ‘infra-led cyclicals’ narrative, the Q1 performance holds significant clues about its ability to capitalize on these macro tailwinds.
The Top Line Story: Growth Amidst Nuances
Finolex Cables reported a respectable 13% year-on-year (YoY) increase in its top-line revenue, reaching ₹1,396 crore in Q1 FY26. This growth is commendable, especially considering the quarter-on-quarter (QoQ) decline of 12% from Q4 FY25. However, this sequential dip isn’t necessarily a red flag; Q1 often sees a moderation after the typical year-end push in Q4, and seasonal factors can play a role.
Let’s dive into the segments that define this revenue trajectory:
Overall Revenue Trends (₹ In Cr)
| Period | Revenue | Q-o-Q | Y-o-Y |
|---|---|---|---|
| Q1FY26 | 1396 | (12)% | 13% |
| Q4FY25 | 1595 | - | - |
| Q1FY25 | 1230 | - | - |
Electrical Cable Segment: Powering Ahead ⚡
The undisputed star of the show remains the Electrical Cable segment, which delivered a robust 17% YoY revenue growth, clocking in ₹1,206 crore. This segment’s strong performance is largely volume-driven, with wire volumes growing by a solid 16% and power cables volumes doubling year-on-year. This aligns perfectly with the broader economic narrative of capex revival and infrastructure development in India. It indicates that Finolex is effectively tapping into the increased demand for electrical components needed across industrial, commercial, and residential projects.
However, it’s worth noting the segment’s EBIT grew by only 1% YoY, despite strong revenue growth. While the unseasonal rains impacting agricultural applications were cited as a minor dampener, this disparity hints at some cost pressures or product mix shifts within the segment that bear watching.
Electrical Cable Revenue & EBIT (₹ In Cr)
| Period | Revenue | Q-o-Q | Y-o-Y | EBIT | Q-o-Q | Y-o-Y |
|---|---|---|---|---|---|---|
| Q1FY26 | 1206 | (13)% | 17% | 117 | (23)% | 1% |
| Q4FY25 | 1391 | - | - | 153 | - | - |
| Q1FY25 | 1032 | - | - | 116 | - | - |
Communication Cable Segment: A Signal Interruption 📉
The Communication Cable segment presents a contrasting picture. Revenue dipped 9% YoY to ₹109 crore, and EBIT saw a substantial 56% YoY decline, dropping to just ₹1.30 crore. The primary culprit? Delays in Optical Fiber Cable (OFC) agreements with customers.
This is a critical point for future earnings. While the electrical segment is thriving, the communication side faces headwinds. The question isn’t just about current performance but also about the company’s ability to clear these bottlenecks. Are these delays temporary, or do they indicate deeper issues in securing new OFC contracts amidst competitive pressures or policy shifts? Investors will be keenly observing if management can successfully navigate these “agreement delays” in subsequent quarters, as the resolution could unlock significant future revenue.
Communication Cable Revenue & EBIT (₹ In Cr)
| Period | Revenue | Q-o-Q | Y-o-Y | EBIT | Q-o-Q | Y-o-Y |
|---|---|---|---|---|---|---|
| Q1FY26 | 109 | (11)% | (9)% | 1.30 | (20)% | (56)% |
| Q4FY25 | 123 | - | - | 1.62 | - | - |
| Q1FY25 | 119 | - | - | 2.95 | - | - |
Other Segments: Weathering the Storm 🌧️
The “Other Segments” (likely including appliances) also saw an 8% YoY revenue dip, largely attributed to the unseasonal rains impacting appliance sales. This highlights the vulnerability of certain segments to external, uncontrollable factors.
Decoding the Profitability Puzzle
Finolex Cables’ profitability largely mirrored its revenue trends. EBITDA grew 11% YoY to ₹185 crore, and PAT (Profit After Tax) increased 13% YoY to ₹139 crore. This indicates that the company maintained its profit margins broadly in line with revenue growth.
EBITDA & PAT Trends (₹ In Cr)
| Metric (Rs. In Cr) | Q1 FY26 | Y-o-Y Growth | Q-o-Q Change |
|---|---|---|---|
| EBITDA | 185 | 11% | (16)% |
| PAT | 139 | 13% | (9)% |
While the absolute numbers show growth, a closer look at margins reveals a slight compression. The EBITDA margin was 13.25% in Q1 FY26, down slightly from 13.58% in Q1 FY25. Similarly, PAT margin was 9.96% compared to 10% last year. This suggests that while revenue expanded, the company might have faced rising input costs or increased operational expenses relative to sales.
The Profit Before Tax (PBT) bridge shows that improved margins were a positive contributor (₹27.52 Cr increase), and ‘Other Income’ also played a notable role (₹7.79 Cr increase). However, increases in ‘Other Expense,’ ‘Depreciation,’ and ‘Employee Cost’ somewhat offset these gains. A significant contribution from ‘Other Income’ to PBT growth should be observed, as sustained profit growth is ideally driven by core operational efficiencies and revenue expansion, rather than non-operating income.
Overall, Finolex Cables exhibits characteristics of a stalwart or fast grower, demonstrating consistent, albeit medium-paced, growth in its core business. The challenge will be to see if they can accelerate this growth by resolving the issues in the communication segment and leveraging their CapEx effectively.
Fortifying for the Future: CapEx and Working Capital
The balance sheet offers strong cues about Finolex Cables’ future ambitions. The company has significantly increased its Property, Plant and Equipment (PPE) from ₹441.40 crore in June 2024 to ₹558.04 crore in June 2025. Crucially, Capital Work-in-Progress (CWIP) has also risen substantially from ₹180.17 crore to ₹234.44 crore. This significant surge in CapEx and CWIP strongly indicates that Finolex Cables is investing for future growth, expanding its manufacturing capabilities to meet anticipated demand. This move is well-aligned with the macro tailwinds of manufacturing and infrastructure growth in India.
The nature of this CapEx, likely for capacity expansion or technological upgrades, suggests a focus on long-term revenue and earnings growth. The gestation period for these new capacities will be key to determining when they begin contributing meaningfully to the top and bottom lines.
On the working capital front, Finolex Cables appears to be managing efficiently:
- Inventories decreased from ₹863.56 crore to ₹757.34 crore even as sales increased, a positive sign of efficient inventory management and strong product off-take.
- Trade Receivables saw a modest increase from ₹216 crore to ₹250 crore. When viewed against the 13% revenue growth, the growth in receivables is proportional, indicating stable credit policies and collection efficiency.
The company’s financing position remains robust, with minimal borrowings (non-current borrowings at ₹0.80 Cr and current at ₹0.07 Cr). This suggests that the substantial CapEx is being funded primarily through internal accruals and a healthy equity base (₹4,749.57 Cr), a strong indicator of financial health and operational cash flow generation.
The Road Ahead: Navigating Growth and Headwinds
Finolex Cables’ Q1 FY26 results paint a picture of a company capitalizing on India’s domestic growth story, particularly in the electrical cable space. The significant capital expenditure signals confidence in future demand, positioning them to benefit from continued infrastructure and industrial expansion.
However, the underperformance of the Communication Cable segment, specifically due to OFC agreement delays, is a notable concern. Its resolution could be a key determinant of the company’s ability to achieve higher overall growth rates.
As an expert financial analyst, my view remains cautiously optimistic. The core electrical business is strong and aligns with favorable macro trends. The increase in CapEx is a forward-looking positive, suggesting management is actively investing in expanding capacity for anticipated demand. The key watchpoint will be the trajectory of the communication segment and the ability of management to convert the pipeline of OFC agreements into firm orders and revenue. Investors should monitor how these strategic investments translate into sustained top-line and bottom-line growth in the coming quarters, especially given the current market volatility and FPI outflows.
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