Finolex Cables is embarking on a new investment phase focused on expanding its electrical and communication-cable capacities. The company is enhancing fibre-draw capacity, establishing backward-integration facilities, and investing in its manufacturing network. The critical question remains whether demand will rise sufficiently to utilize the new capacity and enhance productivity.
Finolex Cables was trading around ₹1,450 per share, with a market capitalization of roughly ₹22,176 crore and a P/E of around 28x. The stock’s 52-week range was approximately ₹701–₹1,498, while its book value stood at around ₹398 per share.
The Asset Base Is Expanding
The expansion is already visible in Finolex’s manufacturing footprint. The company has committed to significant capacity investment across its facilities, while its latest Q1 FY27 presentation shows that capital expenditure remains focused on expanding manufacturing capabilities. Management said FY27 capex is expected to be around ₹300 crore.
This investment needs to be viewed against the company’s existing asset base. The FY25 annual report had standalone Property, Plant and Equipment(PPE)
of ₹565.5 crore, while the FY26 figures referenced in the company’s financial disclosures show a materially higher asset base. The broader issue is whether the additional capital will start generating revenue and EBIT at a sufficient rate as utilisation improves. The company’s official investor materials also identify ongoing capacity expansion as a key part of its strategy.
Fibre Capacity Is Doubling
The communication-cable business is at the centre of this investment cycle. Finolex has decided to move its fibre-draw capacity from 4 million km to 8 million km in one step, instead of implementing the expansion more gradually. Management said the decision was driven by the global shortage of optical fibre and strong demand.
The company has also commissioned its preform facility. Management said the 100-tonne Phase 1 preform capacity is intended to be used almost entirely for captive production, with the preform converted into fibre and then cable rather than being sold externally.
That creates a backward-integration benefit by reducing dependence on imported preforms. The investor presentation also says the facility eliminates import duty and supply-chain dependence and that Finolex is on track to operationalize the full 8 million km fibre-draw capacity.
Revenue Has Not Yet Kept Pace
The historical communication-cable numbers show why utilisation matters. Communication-cable revenue was ₹508 crore in FY25 and ₹500 crore in FY26, despite higher optical-fibre volumes.
The company therefore expanded capacity during a period when revenue from this segment was broadly flat. This does not necessarily mean the investment is underperforming, because capacity additions can precede demand. But it does mean that the incremental assets require stronger volume growth to improve capital productivity.
The situation changed materially in Q1 FY27. Communication-cable revenue increased 62% YoY to ₹176 crore, supported by significantly higher OFC volumes. Management said volumes rose by around 30%, while higher fiber prices also supported the quarter.
Fibre Prices Are A Major Variable
The current profitability of the communication segment also cannot be viewed purely as a capacity story. Management said fibre prices had risen sharply from around $5–6/km in December 2025 to $17–18/km before settling around $11–13/km, depending on the product and market conditions.
This price environment helped Finolex because some of its Q1 sales were made using lower-cost inventory acquired earlier. Management explicitly cautioned that the unusually high communication-cable margins should not be annualized because margins are expected to normalise as older raw material is consumed.
This makes utilisation an even more important measure. The new capacity needs to generate sufficient volumes even after fibre prices return to more normal levels.
Electrical Cables Provide The Counterpoint
Finolex’s electrical-cables business shows what stronger utilization can do. FY26 electrical-cable revenue increased 22% to ₹5,490 crore, while EBIT rose 18% to ₹563 crore. Q1 FY27 revenue reached ₹1,767 crore, up 47% YoY, supported by strong growth in automotive, agricultural, solar and other applications.
Management said the growth was volume-led rather than simply a result of copper-price pass-through. It also indicated that margins in the domestic electrical-cable business should remain sustainable around current levels.
The company is also increasing its exposure to solar cables and power cables, while its E-beam technology is being developed for high-rise, industrial, defence and specialty applications.
Data Centres Could Drive Fibre Demand
One of the most important demand catalysts for the new fibre capacity is data-centre expansion. Management said the increase in AI-driven data-centre investment has created a significant rise in global fibre demand, with higher-fibre-count cables increasingly being required by hyperscalers.
Finolex is also developing capabilities for cables with much higher fibre counts for data-centre applications. Management said the company is working on R&D and capex to support these products. This provides a potential structural demand driver, although management has not yet quantified the eventual revenue contribution from this opportunity.
BharatNet Remains A Question Mark
BharatNet Phase 3 is another potential catalyst for fibre demand, and Finolex’s investor presentation specifically identifies it alongside data centres and defence as a demand driver.
However, management’s latest commentary remains cautious. When asked about BharatNet, it said there had not yet been meaningful progress and that potential winners were effectively waiting because prices remained high. This means the company cannot currently rely solely on BharatNet to absorb its expanded fibre capacity.
ROCE Needs To Catch Up
For investors, the most important long-term measure is whether the larger asset base translates into better capital efficiency. The FY26 standalone ROCE figure cited in the supplied rationale was only marginally higher than FY25, despite the expansion in assets.
The latest Q1 numbers provide an early indication that operating leverage is improving. Consolidated EBITDA increased to ₹285 crore, while EBITDA margin rose to 14.2% from 11.6% in Q1 FY26. PAT increased to ₹249 crore.
However, communication-cable margins were unusually strong because of the current fibre-price and inventory environment, meaning the sustainability of these margins remains uncertain.
Finolex Cables has deliberately expanded capacity ahead of demand, especially in optical fibre. The move from 4 million km to 8 million km of fibre-draw capacity and the commissioning of a captive preform facility create a larger platform for future communication-cable growth.
Encouraging demand signals are already coming from data centres, AI infrastructure, exports, and higher OFC volumes. Q1 FY27 communication-cable revenue grew sharply, while the broader electrical-cable business also delivered strong volume growth.
But the investment case ultimately depends on utilization, fibre prices and demand absorption. BharatNet has yet to provide meaningful visibility, while management expects current communication-cable margins to normalize as older low-cost inventory is consumed.
The key monitorables are therefore fibre capacity utilisation, communication-cable volumes, fibre pricing, data-centre orders, EBITDA per unit of capacity and ROCE. The success of the expansion cycle will be visible when revenue and EBIT begin growing faster than the capital employed, rather than simply when Finolex adds more production capacity.