**Finolex Cables** - Q4 FY20 (Audited –Cons)
CMP: 297
Total revenue from operations 651 Cr
823 Cr (-20.89%) YoY | 702 Cr (-7.25%) QoQ
Year ending revenue: 2,877 Cr Vs. 3,077 Cr (-6.44%)
Net Profit of 64.4 Cr
124.1 Cr (-48.32%) YoY 102.7 Cr (-37.29%) QoQ
Year ending Net profit: 391 Cr Vs. 407 Cr (-3.98%)
EPS (in Rs.) 4.22
8.12 YoY |6.72 QoQ
Year ending EPS: 25.57 Vs. 26.62
View: Result is down and below expectation. YoY revenue declined and profit significantly declined in YoY and QoQ.
**Business Updates & Highlights**:
Q4FY20 EBITDA was around INR 80.5 Cr Vs. 144.4 Cr in Q4FY19 therefore declined by 44.2% in YoY. EBITDA margin is around 12.3% Vs. 20.5% in YoY.
FY20 EBITDA was around INR 302.4 Cr Vs. 386.7 Cr in FY19 therefore declined by 21.7% in YoY. EBITDA margin in FY20 was around 10.5% Vs. 12.6% in FY19.
Company is primarily operating into three main segment viz. Electrical cables – 58.8%, Communication cables – 11.5% and Copper Rods – 27%. YoY topline growth for Electrical cables – (24.1%), communication cables – (1%) and Copper Rods – (4.8%). YoY bottom line growth for Electrical cables – (30.7%), communication cables – (54.5%) and Copper Rods – 244% (not significant in bottom line)
The Board of Directors at its meeting held on 27 June, 2020, proposed a dividend of Rs. 5.50 (previous year Rs. 4.50) per equity share.
**Financial**
ROE and ROCE is around INR 15% and 23% respectively and book value per share is around INR 166 and share is currently trading at 1.8x of its book value. Company is currently trading at annualized PE of 12 which is average as per Industry benchmark. Promoter holding is around 35.9% in the company which is low but stable. FIIs and mutual fund hold around 7.5% and 19.2% in the company. Cash and cash equivalent from operating activities as of March 2020 is around INR 259 Cr Vs. 154 Cr as of March 2019. The good thing is company is virtually debt free and realization is also fair.
Position: Share support price is INR 270. Short term outlook is bearish. Long term investor based on their risk appetite can continue with the company.
**Share View**: Share price high 445 (52 week) and now 292. Finolex Cables Ltd is an Indian manufacturer of electrical and telecommunication cables based in Pune, Maharashtra. It is the flagship company of the Finolex Group, established in 1958. The company also manufactures polyvinyl chloride sheets for roofing, signage and interiors
Opportunities: Consistent performer and strong management group. Company is also at reasonable valuation. Company is debt free and no finance cost obligation. Paying good dividend and also increasing in YoY.
Risk: Covid – 19 outbreak Q1 and Q2 FY21 can further downslide due to lower sales and negative growth as mostly April and May was shut down the company operations.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
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