Shares of Finolex Cables slid 1.7% to INR 1,073.50 on Monday as investors cashed in gains from a blistering post-earnings surge that had lifted the stock to a 52-week high of INR 1,184.80 just days earlier. The Pune-based cable maker reported Q4 FY26 consolidated net profit of ₹224.43 crore, up 17% year-on-year, on net sales of ₹1,951 crore — a 22.4% YoY jump — though operating margin compression remains a key investor concern. No fresh negative catalyst is behind today's dip; this is textbook profit-taking after the stock rallied roughly 40% from its April lows near ₹820.
Record Revenue Crushed Expectations — but the Gains Came Cheap
Q4 revenue hit an all-time quarterly high of ₹1,951 crore, with 22% growth driven by robust demand across electrical and telecom cable segments.
Analyst consensus had pegged revenue at just ₹1,550 crore , meaning Finolex blew past forecasts by roughly 26%. That kind of beat explains the ferocity of the rally — and the temptation to sell into it.
Margins Are Heading the Wrong Way
Operating profit margin fell to 9.25%, down from 10.71% a year ago — a 146-basis-point contraction signaling rising input costs and competitive pricing pressure.
Gross margins dropped even harder, from 15.4% to 10.9% over two quarters, pointing to copper and aluminium cost inflation that Finolex has struggled to pass on to customers. For shareholders, the math is stark: revenue is growing fast, but each rupee of sales is yielding less profit than before.
Full-Year Numbers Tell a Sobering Story
For all of FY26, net profit rose just 1.85% to ₹713.72 crore even as sales surged 18.8% to ₹6,321 crore. That gap — nearly 19% topline growth delivering under 2% profit growth — underscores how badly margin erosion is eating into the bottom line.
A Cheaper Stock Than Peers, but Perhaps for Good Reason
Finolex trades at roughly 26.4x trailing earnings versus 54.5x for rival Polycab India and 56.7x for KEI Industries.
It also trades at just 3.2x book value versus Polycab's 12.1x, a discount driven by Finolex's lower return on equity of 13.6% compared to Polycab's 19.8%.
Capacity expansions in data-center and solar cables support a positive forward outlook, though supply-chain risks persist.
A new CEO taking the helm June 1 and a 450% dividend (₹9/share) add governance and income appeal , but until Finolex proves it can convert booming sales into fatter profits, the valuation discount is likely earned, not accidental.