GuruFocus - Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Finolex Cables (NS:FNXC) Ltd (BOM:500144) reported a 7% increase in revenue compared to the previous quarter and a 10% increase compared to the same quarter last year.
- The company expects a recovery in the electrical cables segment, indicating potential growth in the near future.
- Opportunities in the fiber segment remain promising, with expectations of increased demand from BSNL and 5G rollouts.
- The company is on track to achieve a significant increase in revenue from its other products, aiming for 300 crores this year compared to 230 crores last year.
- Major CapEx projects, including the EBM facility and auto cable line expansion, are nearing completion, which could enhance production capabilities.
- The quarter was challenging due to high inventory levels and declining copper prices, which impacted margins.
- Margins dropped approximately 4% compared to the same quarter last year and 1.5% compared to the previous quarter.
- The communication cables segment faced low realizations due to falling copper and fiber prices, affecting profitability.
- Volatility in copper prices has led to uncertainty in demand and pricing strategies.
- The company's market share in the wire segment has remained steady, but competition and price volatility pose ongoing challenges.
A: The bids have been opened recently, and while our partners have won three bids, it's too early to discuss contract values or specifics. We have an understanding with one of the bidders to use our cables, but I prefer not to disclose names or numbers at this stage. - Deputy CEO and CFO
Q: The volume growth for electrical wires was muted at 2% this quarter. Can you explain the current demand scenario?
A: The muted growth is partly due to commodity price volatility, making it hard to distinguish between speculative and genuine demand. There was significant pre-buying when copper prices were rising, followed by a sharp correction, which affected further buying. The volatility has impacted trade behavior. - Deputy CEO and CFO
Q: What is your market share in the wire segment, and can you update us on any pending litigation?
A: Our market share is slightly under 20% based on last year's wire revenue of around 4,200 crores out of a 25,000 crore market. Regarding litigation, the NCLAT has directed the NCLT to decide on the ownership of disputed shares, which affects control over entities. - Deputy CEO and CFO
Q: Can you discuss the capacity and utilization for electrical cables and wires, and any expansion plans?
A: We have the capacity to produce approximately 2,324 lakh coils per month, with current utilization at 60-65%. Auto cables are at 80% utilization, while agriculture cables are lower due to seasonal demand. Overall, utilization is around 65-70%. - Deputy CEO and CFO
Q: What is your revenue guidance for this year, and can we expect margins to be around 10%?
A: Last year, we achieved just over 5,000 crores. If copper prices remain stable, we could reach around 6,000 crores. Margins should return to normalcy in the coming quarters, tracking back to around 10%. - Deputy CEO and CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.