Jefferies On Finolex Cables: Finolex Cables has already rallied 60% in 2026, but Jefferies believes the stock may still have room to run as a sharp rise in optic fibre prices and a planned doubling of fibre capacity open up a new earnings lever.
Analysts Sonali Salgaonkar and Saurabh Kulkarni have retained their ‘Buy' rating on Finolex Cables with a target price of Rs 1,410.
Despite the strong year-to-date (Y-T-D) run, the stock trades at around 21x one-year forward PE, which Jefferies says remains at a notable discount to peers.
The brokerage estimates 22% EBITDA CAGR over FY26–29E, with electricals remaining the core business and optic fibre, solar and EHV cables providing additional growth drivers.
OFC Has Quietly Become A Bigger Profit Driver
The biggest change in Finolex Cables' earnings profile is coming from its communication business, which is around 75% optic fibre cable (OFC).
The segment's EBIT margin jumped to around 30% in the June 2026 quarter from just 1% a year earlier, making communication around 23% of the company's quarterly EBIT despite accounting for only about 9% of sales.
The trigger has been a sharp rise in optic fibre prices. Standard fibre prices climbed from around $5–6 per km in December 2025 to $17–18 per km by mid-2026, driven by AI-related demand. Prices now appear to be settling around $11–13 per km, still roughly twice their level at the start of the year.
Jefferies cautions that fibre prices could eventually normalise as demand settles and older, lower-cost raw-material inventory gets exhausted. But for now, the price environment is providing a major lift to margins.
Fibre Capacity Is About To Double
Finolex is targeting a doubling of its fibre-draw capacity to 8 million km by December 2026, or Q3FY27E.
At an assumed fibre price of around $11 per km, Jefferies estimates the expanded capacity could generate quarterly sales of around Rs 2–2.5 billion, equivalent to roughly 11% of FY28E revenue.
Higher-value products and better design could push this potential towards Rs 3 billion per quarter.
Jefferies expects communication revenue to rise 27% year-on-year in FY27E, although it expects growth to normalise thereafter. Overall sales are projected to grow at around 15% CAGR through FY26–29E.
Electricals Remains The Main Engine
Despite the OFC opportunity, Finolex remains primarily an electricals company, with the segment accounting for around 85% of total sales.
Construction wires make up roughly 65% of electricals, while auto, agricultural and industrial cables contribute around 10% each.
Jefferies sees further growth even without major new investments. Capacity utilisation could increase from around 66% in FY26 to 80–85%, potentially supporting around 15% additional sales growth.
The brokerage estimates electricals revenue will grow at around 17% CAGR over FY26–29E.
Solar And EHV Add More Wires To The Growth Story
Finolex's newer businesses are also beginning to contribute.
The company launched solar cables last year and has ordered a second e-beam line, which could double capacity.
Its EHV cable joint venture with Sumitomo Electric posted Rs 24 crore profit in FY26, while June-quarter sales and profit stood at Rs 87 crore and Rs 7 crore, respectively.
The EHV JV has an order book of around Rs 300 crore and supplies cables up to 500kV. Demand is currently strongest in the 66–110kV range, with 220kV demand also increasing.
OFC Exports Find Buyers Overseas
Exports remain relatively small at around Rs 50 crore in Q1, or roughly 2% of sales. However, around Rs 30-40 crore came from OFC exports to the US and Europe.
Jefferies notes that export margins are higher than domestic margins, adding another potential benefit as the OFC business scales.
60% Rally Hasn't Made Finolex Overvalued
Jefferies estimates Finolex Cables' sales and EBITDA to compound at 17% and 22%, respectively, between FY26 and FY29E.
The brokerage has retained a ‘Buy' rating and Rs 1,410 target price, valuing the company at around 23x forward PE, a 15% premium to its five-year historical average.
Its argument is that even after the 60% YTD rally, Finolex trades at only around 21x one-year forward PE, leaving it at a considerable discount to most cable and wires peers.
Key risks, analysts believe, include demand slowdown and sharp volatility in copper and optic-fibre prices.
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