From ₹344 to ₹848: This multibagger stock zooms 146% in 10 months; 41% in a month

Finolex Cables (FCL) shares are one of those multibagger stocks that have delivered solid returns to its shareholders in the last one year, outperforming the BSE India Infrastructure index and BSE Midcap index. This fast moving electrical goods (FMEG) stock has surged 146% in the last 10 months, from its 52-week low of ₹344 touched on May 19, 2022, to a fresh all-time high of ₹847.60 in intraday trade on March 6, 2023.

The share price of FCL, one the country’s largest manufacturer of electrical and telecommunication cables, has jumped 96% in the last 12 months, as compared to 9.5% rise in the BSE Midcap index and 5.6% growth in S&P BSE India Infrastructure index. In the last six months, the stock has given 60% return to its shareholders, while it 40% in the three-month period. On the year-to-date (YTD) basis, the counter climbed 41%, while it added nearly 44% in a month and 12% in a week.

On Monday, Finolex Cables shares opened marginally lower at ₹775 against the previous closing price of ₹776.2 on the BSE. During the session, the stock surged as much as 9.2% to hit a record high of ₹847.6, before settling 1.08% up at ₹784.6 levels. On the volume front, there was three-fold growth as 2.2 lakh shares changed hands over the counter as compared to the two-week average of 0.86 lakh stocks. The market capitalisation of the company stood at ₹12,000 crore.

The recent rally in shares of Finolex Cables, the flagship company of the Finolex Group, can be attributed to improved business outlook amid revival in real estate volumes and traction in the optic fibre business as well as decent financial numbers. Besides, long term positive outlook on real estate is also likely to boost demand for cables and other building materials.

“We expect volume growth to be supported by a revival in real estate volumes and traction in the optic fibre business. With ease in higher cost inventory and stable raw material prices, we expect gradual improvement in margins. FCL’s long term growth outlook remains intact given its strong brand recall, expanding product portfolio, clean balance sheet, and strong cash flow generation,” analyst at Geojit Financial Services said post the company’s Q3 results.

For the October-December quarter of the current fiscal (Q3 FY23), Finolex Cables reported 42% growth in net profit to ₹135 crore as compared to ₹95 crore in the same period last year. On a sequential basis, the profit dropped marginally from ₹137 crore in Q2 FY23. The revenue grew 18% year-on-year to ₹1,150 crore from 973 crore in the corresponding period last year, thanks to price hikes. In the September quarter of the current fiscal, the revenue stood at ₹1,091 crore.

As per the company, the Union Budget 2023 would improve cash liquidity in the market, benefiting the real estate sector. The focus on the growth of green infrastructure and real estate would lead to development in the infrastructure housing sector, smart city projects, metros & telecommunication sector (5G), which is a great opportunity for FCL to grow demand for various cables and other products.