This Pune-based firm turned your Rs 1 lakh to over Rs 10 lakh in 10 years

Dalal Street has produced several multibaggers in the past 10 years despite uncertainties in the form of demonetisation, volatile crude oil prices, implementation of GST and RERA, and now Covid-19 pandemic. Pune-based Finolex Cables is one of them. Amid the ongoing rally in the broader markets, the scrip has gained 200% since March 2020 lows. In the long run, it has jumped 970%, or over 10 times, to Rs 514.55 on July 4, 2021, from Rs 48 on July 8, 2011. This means, Rs 1 lakh invested in this stock 10 years back has now turned into Rs 10.70 lakh. Meanwhile, it had touched a high of Rs 743 in January 2018.

Of late, shares of the company have been buzzing in the domestic equity market due to better-than-expected financial results for the quarter ended March 31. Analysts see more than 20% upside in the stock on the back of reasonable valuations and improving growth visibility.

What does it specialise in?

Finolex is India’s largest and leading manufacturer of electrical and communication cables. The company offers a wide range of electrical and communication cables. Its wire and cable products are used in applications such as automobiles, lighting, cable TV, telephone, and computers to industrial applications touching every person in his daily life. Finolex has added electrical switches, LED-based lamps, fans, low voltage MCBs, and water heaters to its range of products

Report card

For the financial year ended March 31, the company posted an 18% growth in consolidated net profit at Rs 461.46 crore against Rs 391 crore last year. On the other hand, revenue from the operation of the company declined by nearly 4% YoY to Rs 2,768 crore. “The company’s operations and financial results for the quarter and the year ended have been impacted by the lockdown imposed to contain the spread of Covid-19,” Finox Cables said in a regulatory filing.

Consolidated revenue from operations jumped by 41% YoY to Rs 921 crore for the quarter ended March 31. On the other hand, consolidated profit increased by around 160% YoY to Rs 167.59 crore on a low base of Rs 64.49 crore.

Where net sales of the company have grown a little over 3% annually over the past 10 years, net profit increased by around 11% annually during the same period.

Outlook

Brokerage Sharekhan has a ‘Buy’ rating on Finolex Cables with a price target of Rs 623. “We believe the company’s operations are expected to improve further as the supply chain becomes stable with an improving demand environment and rising infrastructure investments. Further, Covid-19 led to impact on unorganised players allows the company to increase its market share. Finolex’s debt-free balance sheet and net cash position provide comfort in the present environment,” the brokerage said.

It further added that the government’s push for optical fibre cable will aid business and boost demand for telecom cables for the company.