Finolex Cables (FINCABLES)

FairStock Score: 75/100 — STEADY

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 0/1

Key Financials

Strengths

• Zero debt with positive free cash flow of ₹125 Cr and Altman Z-score of 3.46, indicating a fortress-like balance sheet
• Piotroski F-Score of 8/9 shows strong profitability and earnings quality
• Revenue growth is healthy: 5-year CAGR of 13.95% and latest quarter sales up 16.37%
• ROCE of 17.67% and ROE of 12.39% demonstrate efficient capital use without leverage
• FairStock Score of 65/100 reflects a steady, established electrical cables business

Concerns

• Profit declined 2.04% despite 16.37% sales growth, showing margin compression
• Price of ₹968.40 is far above Graham Number of ₹600.14 and DCF value of ₹168.22, leaving no margin of safety
• P/E of 20.52 and P/B of 2.70 are rich for a business with falling profits; PEG of 19.06 reinforces overvaluation
• Free cash flow of ₹125 Cr is small relative to the ₹13,974 Cr market cap, offering limited valuation support

AI Analysis

Finolex Cables is exactly the kind of steady, unglamorous business I like to study. It makes a necessary product, electrical cables, and its balance sheet is fortress-like: zero debt, positive free cash flow of ₹125 Cr, an Altman Z-score of 3.46, and a Piotroski F-score of 8 out of 9. A 17.67% ROCE and 12.39% ROE show competent capital allocation, especially with no leverage. Revenue has compounded at 13.95% over five years and the latest quarter sales rose 16.37%, so demand is healthy. The FairStock score of 65/100 calls it 'steady,' and I agree. But the price matters. At ₹968.40, the stock trades at 20.52 times earnings and 2.70 times book value. My Graham Number comes out to ₹600.14, and a conservative DCF value is ₹168.22. That means the market price carries a negative margin of safety. Even the EV/EBITDA of 2.14 does not convince me, because cash flow is still small relative to the ₹13,974 Cr market cap. Most troubling: while sales grew 16.37%, profit fell 2.04%. The company is earning more revenue but keeping less of it. A PEG of 19.06 reinforces that the current price is not justified by near-term earnings growth. For a quality stalwart, I demand a margin of safety. Here, I find none. If the price falls to a level closer to conservative intrinsic values, perhaps below the Graham Number, this would become an interesting candidate. Until then, patience is the wiser course.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer