Finolex Cables Q2 FY27 Earnings Call: Communication Cables Revenue Doubles YoY, Fiber Capacity To Reach 8 Million Km (FINCABLES)

Broad-Based Beat on Volume and Operating Leverage

• Standalone revenue of Rs.2,269 Cr, up 65% YoY — from Rs.1,376 Cr in Q2 FY 2025-2026 and up 13% QoQ from Rs.2,013 Cr in Q1 FY 2026-2027; H1 FY 2026-2027 revenue stood at Rs.4,282 Cr, up 55% YoY.
• Standalone EBITDA (ex-other income) of Rs.309 Cr, more than doubling YoY — margin expanded 322 bps YoY to 13.6%; the CFO attributed the expansion mainly to operating leverage and better margins in certain communication cables segments.
• Standalone PAT of Rs.286 Cr, up 53% YoY and 29% QoQ — standalone PBT grew 57% YoY to Rs.375 Cr; consolidated PAT was Rs.273 Cr, up 68% YoY, including Rs.35 Cr share from the associate joint venture.
• Other income of Rs.89 Cr vs Rs.110 Cr in Q2 FY 2025-2026 — reflecting treasury yield movements and dividend from the associate company; depreciation rose to Rs.23 Cr from Rs.14 Cr on FY 2025-2026 capitalizations.
• Net zero debt balance sheet — consolidated net worth of Rs.6,484 Cr as on 30 September 2026, with cash and liquid investments close to Rs.2,000 Cr.

Communication Cables the Standout; Electrical Steady

• Communication cables revenue grew 116% YoY to Rs.230 Cr — up 30% QoQ; segment EBIT jumped to about Rs.69 Cr from Rs.1.2 Cr in Q2 FY 2025-2026, reflecting scale and good margins in optical fiber cables.
• Electrical cables contributed 86% of revenue at Rs.1,960 Cr, up 65% YoY — up 11% QoQ; segment EBIT rose 68% to Rs.217 Cr with margins steady at 11%.
• Optical fiber volume rose about 30% QoQ — fiber optic cables grew about 25% YoY; growth was largely volume-driven, aided by exports and telecom orders following the Bharti contract signed in Q1 FY 2026-2027.
• Building wire volumes grew low single digits in Q2 FY 2026-2027 — building wires make up about 60% of electrical cables by both volume and value; agri and solar volumes more than doubled (agri from a smaller base), auto revenue rose about 70% and industrials about 25%.
• Other segment (FMEG and trading) revenue of Rs.73 Cr, up 12% YoY — with EBIT up 40%.

Tight Global Supply, Elevated but Likely Transitory Margins

• Overseas demand for optical fiber cable is strong — CEO Mahesh Vishwanathan said most global majors have indicated their lines are booked "until, 27, until end of 27," and buyers without allocation will have to pay a higher price.
• Q2 FY 2026-2027 communication cable supply of Rs.230 Cr included about Rs.28 Cr of exports — current exports go to Malaysia, with Europe and US supplied in Q1 FY 2026-2027; the CEO confirmed the overseas inquiry pipeline is increasing vs the prior quarter.
• Communication cables EBIT margin near 30% is not durable — the CEO attributed the elevation to a sharp rise in fiber prices over the last 6-8 months, said it is "not something that is going to sustain for a long time" ("couple of quarters maybe"), and expects normalization to the mid-teens (period unspecified).
• Standard fiber prices eased from about Rs.1,200/km to about Rs.1,150/km in Q2 FY 2026-2027 — realizations were similar to or slightly lower than Q1; preform prices have stabilized more than in Q1 FY 2026-2027 and Q4 FY 2025-2026, with exotic grades still "quite pricey."
• Hyperscalers have not yet started ordering cables in large numbers — the CEO expects this "at some point in time"; data center cables differ in design, with fiber counts up to 13,000 sought in US and European markets but not yet appearing in India, and pricing cannot yet be generally stated given few inquiries.
• Fiber prices could fall if gas and helium input costs ease — as the Middle East situation settles, but would stay elevated if volatility continues.

Fiber Expansion Ramping; Preform Stabilizing

• Fiber capacity to reach about 8 million km by end of FY 2026-2027 — 4 million km was under testing as of Q2 FY 2026-2027, pending certification of handover conditions; cabling capacity to reach 12-15 million km and preform to an equivalent of 4 million km in about 7-8 months, i.e., around FY 2027-2028.
• At full capacity, fiber-only sales would be about Rs.960 Cr per year at about Rs.1,200/km — a fiber-plus-cable mix would be about 15-20% higher, assuming prices stay at current levels (period unspecified).
• Preform plant utilization was around 50% in Q2 FY 2026-2027 — the plant is in a 3-6 month stabilization period; the CEO said most stabilization should be complete by end of FY 2026-2027, or about one month later.
• Backward integration into preform reduces third-party dependence and is margin accretive — giving more flexibility in telecom tenders such as BharatNet; the CEO did not quantify the margin uplift. Integration beyond preform (silicon tetrachloride/silicon dioxide) has not started, and any capacity increase beyond 8 million km has not been decided — the company will "have to study" viability.
• Solar cable capacity to double from about 5,000 to 10,000 km per month — equipment on order, expected early January (FY 2026-2027), followed by a couple of months of installation; from April (FY 2027-2028) onwards the higher capacity is expected.
• Orders booked for "another quarter and a half" from Q3 FY 2026-2027 — the CEO did not give an order book figure.

Mid-Teens Ambition Hedged; Inventory Build Weighs on Cash Flow

• Mid-teens segment margin is the CEO's framing, not a commitment — asked by Nuvama Institutional Equities whether margins could approach early 20%, the CEO clarified the mid-teens figure includes preform expansion and product mix (period unspecified) and said he could not say whether margins would be north or south of 15%, as preform value addition in data center cables depends on global capacity when hyperscalers come big into India.
• Margins of 11-11.5% are seen as sustainable over the long run (period unspecified) — the CEO said margins have been "more or less stable" in the 10-11% range barring a few instances in FY 2025-2026, with a stronger 13% in Q2 FY 2026-2027.
• H1 FY 2026-2027 operating cash flow was negative Rs.106 Cr — driven entirely by a Rs.460 Cr inventory buildup; the CFO called it a conscious call to secure supplies and expects inventory and operating cash flows to normalize over H2 FY 2026-2027, with the CEO adding "hopefully by the end of this quarter" (Q3 FY 2026-2027).
• Inventory at Q2 FY 2026-2027 quarter end was slightly over 70 days — vs a typical 60-65 days (historically 60-62 days); the CFO did not provide a raw material/semi-finished/finished goods split. Commodity prices touched 14,500 (unit as spoken), inflating inventory value.
• A 10% copper price fall would trigger a price correction the market would expect and demand — the CEO said a small change may not trigger repricing; he does not see substantial short-term volume gains from cheaper copper, and a substantial commodity price fall would cause margin losses on inventory held, a risk for any market participant.
• UltraTech entered the market towards end-September 2026 — the CEO said it is too early to assess its impact and the company will monitor and react where needed; he expects consolidation of smaller, non-listed players over time, saying India is "large enough to be served by 5, 6 people" (period unspecified).
• No wire-side acquisitions planned — the CEO wants to protect the company's own brand; non-wire and non-cable products could present acquisition opportunities, and the cash pile is being held for such options.

Capacity-Led Growth, With Pricing and Mix Caveats

• Receivable days rose to 18 in Q2 FY 2026-2027 from 15 — the CEO called 15 "a little too tight," citing historical levels of 16-17 days (period unspecified), partly reflecting sales booked in the last two days of the month.
• Working capital discipline maintained — management extends no credit to channel partners and buys inventory only for the month's consumption, avoiding long commodity positions.
• Expanded fiber draw capacity expected to come into play towards end of Q2 FY 2026-2027 or early Q3 FY 2026-2027 — fiber draw capacity was fully utilized in Q2 FY 2026-2027.
• No explicit revenue or margin guidance was given for FY 2027-2028 — the CEO declined to commit on margin direction beyond the mid-teens framing and long-run 11-11.5% sustainability view (both period unspecified).