Finolex Cables stock rallies over 6% after Jefferies raises target price by nearly 24%

Shares of Finolex Cables, an electrical and telecommunications cable manufacturer, jumped in morning trade on Friday (August 11) after Jefferies raised its target price by nearly 24 per cent. The stock climbed over 6 per cent and touched the intra-day high of Rs 1,097.65 apiece on the BSE. The stock closed 3.46 per cent higher at Rs 1,066 apiece on BSE. 

Global brokerage Jefferies has maintained a 'buy' call on Finolex Cables and raised its target price to Rs 1,270 apiece from Rs 1,025 apiece earlier. 

According to the brokerage, the company is a beneficiary of housing and capital expenditure in India, and its communication segment is likely to benefit from the 5G rollout.

On the other hand, InCred Equities has retained a 'reduce' rating and raised its target price from Rs 621 apiece to Rs 841 apiece.

"Higher optic fibre salience increases business cyclicality and the stock could structurally trade at a meaningful discount to its electrical C&W peers, in our view," the report read.

Finolex Cables management commentary

Management expects the volume of electrical cable in FY24 to grow by 20 per cent. 

How did the company perform in the quarter ending June 30?

Finolex Cables reported a 39 per cent rise in its net profit to Rs 132.2 crore for the April-June quarter, up from Rs 95.6 crore a year ago. The Pune-headquartered company, in a statement, said its revenue for the quarter rose 19 per cent to Rs 1,204.3 crore from Rs 1,015.7 crore recorded in the corresponding period of FY23.

In volume terms, its flagship electrical wires rose by 29 per cent, while power cables increased by 3 per cent. Within the communication cables segment, the volume of metal-based products improved 17 per cent during the quarter, and optical fibre cable volume grew 50 per cent.

What do analysts suggest?

Zee Business Panellist Ambareesh Baliga is bullish on Finolex Cables after strong management commentary. The expert said, "The management commentary is encouraging, and the anti-dumping duty on cables will be beneficial for the company. I have a positive outlook on the stock, with a target of Rs 1,300 apiece to Rs 1,325 apiece." 

"At the current juncture, the said counter has formed a bearish divergence on a daily scale, where the price is making higher highs and the daily RSI is making lower tops which is a matter of concern. Going forward support stands around 975 and resistance is seen at 1140. So profit booking is expected in the range of 1075-1100 in coming sessions," said Jigar S Patel - Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers.

Finolex Cables share price: Past performance 

In 2023, so far, the stock has gained over 100 per cent against the Nifty50's rise of nearly six per cent. 

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