Vindhya Telelinks is at an interesting inflection point. The company is still largely an EPC business, but the part of its portfolio that is gaining strategic importance is much smaller: cables. Optical fibre, solar PV, railway, EV and other specialty cables are increasingly becoming a larger part of the company’s growth strategy, just as demand for digital and renewable infrastructure is changing the cable industry.
What makes the story more interesting is that this shift is beginning to show up in profitability. The company’s own Q1 release attributed the improvement to a richer product mix and higher contribution from optical fibre cables.
Now, add the proposed Birla Cable merger, which could create a larger cable platform. The question is no longer simply whether VTL can grow revenue. It is whether optical fibre and specialty cables can become a structurally more profitable business, while the merger adds scale and EPC gradually becomes less dominant in the earnings mix.
With a market cap of Rs 3,200 crore, the shares of Vindhya Telelinks Ltd are trading at Rs 2,723 and are trading at a PE of 14 compared to their industry’s PE of 15. The shares have given a return of more than 140% in the last 5 years.
The real story is not the merger
The merger of Birla Cable with VTL was sanctioned by both companies’ boards on March 21, 2026, to be effective from April 1, 2026. According to the merger scheme, VTL’s equity shares would be offered at a ratio of 10:115 for each share held in Birla Cable. As usual, statutory and regulatory approvals remain pending, including clearance under the NCLT process.
Progress on the process front continues. Observation letters dated August 14, 2026, issued by NSE gave no objection, while those from BSE did not note any adverse observations. The scheme documents filed at NSE indicate dates of April 15, May 11 and August 14, 2026.
However, mergers are usually more important as a backdrop to future possibilities. In the case of VTL, the strategic significance is that this adds yet another cable company into its portfolio while it tries to scale up its optical fibre and specialty products. Thus, the ultimate benefit from such an acquisition would have to come from how the additional platform scales up its product mix, capacity and profitability.
Why cables matter more now
However, VTL’s cable business extends far beyond telecom cables, with a portfolio that includes optical fibre cables, railway signalling and quad cables, rolling stock cables, solar PV cables, ship wiring cables, EV charging cables, specialised wires & cables, and connectorised cable products. Additionally, the company has installed long-distance passive optical fibre networks under its IP-1 licence in 23 states.
Why does it matter? The business becomes increasingly significant due to a diverging trajectory compared to EPC. Cable revenue grew from Rs 792.2 crore to Rs 884.1 crore in FY26, whereas EPC revenue declined from Rs 3,304.9 crore to Rs 2,708.5 crore, mainly owing to delays in Jal Jeevan Mission projects.
It makes a difference. Cables do not have to surpass EPC revenues in order for the business to acquire strategic significance for VTL right away. Even if cables remain a smaller business, their higher growth rates and profitability will make them a progressively larger contributor to overall profits.
Q1 shows a bigger margin story
The most telling indication occurred during Q1 FY27. Consolidated revenue from cable stood at Rs 202.1 crore, down slightly from Rs 203.2 crore during the corresponding period last year. Meanwhile, cable EBIT rose sharply from Rs 13.3 crore to Rs 39.5 crore – a significant increase in margins despite broadly unchanged revenues.
Looking at the VTL standalone numbers for Q1 reveals a similar trend. Cable EBITDA jumped up to Rs 42.86 crore from Rs 15.92 crore last year, owing to a greater mix of products and better margins on optical fibre cables.
That, perhaps, speaks volumes when viewed against consolidated PAT growth. Consolidated revenue fell 20.8% year-over-year to Rs 718.9 crore, even as consolidated PAT grew by 22.7% to Rs 75.7 crore. Clearly, VTL’s cable business demonstrated operating leverage through its segment financials.
The pertinent question now becomes whether such improved margins will be sustained. Should they hold good going forward, there would be considerable value accretion in VTL’s cable business independent of revenue growth.
Optical fibre is the bigger opportunity
The role of optical fibre in this shift is crucial. In its most recent annual report, VTL notes the growth opportunities arising due to demands from hyperscale data centres, AI systems, broadband networks, edge computing and digital services. The firm also expects industry-wide adoption trends toward more sophisticated networking functionalities and higher density fibre.
The importance of this dynamic lies in the context in which it occurs. According to the company, the optical fibre communications (OFC) industry was experiencing two consecutive years of declining global demand prior to bouncing back sharply in 2026. Prices for fibre were also rising amid improving demand conditions.
Thus, any changes in the business environment represent more than just an increase in volume levels. The industry is transitioning to products featuring greater fibre density and higher bandwidths, driven mainly by data centres and AI infrastructures. VTL’s current positioning with respect to advanced optical fibre may position it favourably within the higher-value end of the industry cycle.
Q1 margin growth also reflects the significance of such changes. There seems to be evidence of a better mix of OFC sales contributing to improved profitability margins in cable-related products.
The EV bet is more than EVs
VTL’s business model includes more than just electric vehicle cables. Although VTL does manufacture EV charging cables, it also offers cables enhanced with E-Beam irradiation, making them useful in solar applications, rolling stocks, and ship wiring.
E-beam irradiation technology is critical since it improves cable attributes like durability, heat resistance, and current flow capability. The company has two E-beam irradiation facilities currently running, with another due to become operational at the end of Q1 FY27.
Importantly, the same technological capability can support various industries’ needs. Thus, instead of depending purely on EV penetration for growth, VTL could deploy the production capability to serve the renewables sector, rail transport systems, vehicles, and maritime industries.
That diversifies the specialty cable business away from dependency on one market. Instead, there would be multiple potential customers who may value similar capabilities. The key indicator to watch will be conversion to actual utilisation and revenues.
Solar and rail add another layer
The business environment already provides Solar with the ability to contribute to cable growth at VTL. According to the company, India commissioned about 50 GW of solar power in a period greater than one year and aims to commission between 280 and 300 GW by 2030 as part of its overall 500 GW renewable energy target.
Such factors present a direct addressable market opportunity for solar PV cables. VTL has made investments in augmentation of capacity in solar PV cables, among others, including specialty cables at its Rewa manufacturing facilities. In its fiscal year ending FY26, the company booked fixed asset additions worth Rs 51.24 crore, primarily towards such capacities.
An additional market that offers structural opportunities for VTL includes railways. The company produces signalling cables, quad cables and rolling stock cables. Railway modernisation, rolling stock procurement, electrification and infrastructure development would drive demand.
Combined, such markets represent the formation of a specialty cable product portfolio consisting of digital infrastructure, renewable energy and railways. Diversification into these areas may assist VTL to decrease its reliance on traditional telecom demand cycles and infrastructure demand cycles.
But the EPC problem has not disappeared
What stands out is how significant EPC continues to be despite the thesis call focusing on cables. During FY26, standalone revenues dropped to Rs 3,566.3 crore from Rs 4,053.8 crore, while EBITDA came down to Rs 224.1 crore from Rs 267.8 crore. Interest expenses rose to Rs 148.2 crore from Rs 101.8 crore owing to additional borrowing needs for funding working capital.
Working capital management takes on critical importance in this case. Trade receivables jumped to Rs 2,163.9 crore from Rs 1,705.9 crore, owing primarily to higher receivables from the UP-JJM project, according to VTL.
Looking at Q1 FY27 numbers reveals how EPC continues to impact the consolidated performance numbers. EPC revenue slumped to Rs 520.7 crore from Rs 710 crore YoY, even while cable EBIT surged sharply higher.
Therein lies the key difference here. If cables can deliver on higher margins, there’s potential upside, provided VTL manages to improve collection efficiency and lower working capital in EPC projects too. Else, the cable margin improvement may get partially negated by finance costs elsewhere.
Can the merger change the equation?
That is precisely why this merger between Birla Cable and VTL matters. At the very moment when VTL is building scale through optical fibres and specialty cables, the deal brings yet another cable company within VTL’s fold.
According to CARE Ratings, the aim of the plan was operational streamlining, simplification of corporate structures and improvement of efficiency. In any case, there were additional approvals required before completing the transaction and subsequently reviewing the ratings’ implications.
What stands out about the timing of this merger is the rising operating momentum that Birla Cable appears to be experiencing. For instance, during Q1 FY27, Birla Cable achieved revenues of Rs 266.64 crore, growing by 51.1% YoY, with the EBIT margin expanding to 17.5%. These results paint a positive picture.
But it remains to be seen whether Birla Cable can extract meaningful value from the deal beyond merely adding two businesses together mathematically. Whether investors can get convinced by improved capacity utilisation, larger addressability, greater product penetration and retention of margins is what truly matters.
Can it create investor value?
VTL’s cable business thesis is therefore no longer just a diversification play; there is operational improvement underway. Cable revenues hit Rs 884.1 crore in FY26, whereas Q1 FY27 cable revenues stayed largely stable, although EBIT was almost three times higher compared to last year. Simultaneously, VTL is developing its optical fibre and e-beam technologies in several specialist applications, including data center connections, solar power, electric vehicles, and railways, among others.
There remain three criteria that must be met: sustaining cable margin expansion, synergies from the Birla Cable acquisition, and working capital management of its EPC segment. The response to the title question is therefore conditional rather than solely based on synergy expectations arising from the Birla Cable deal.
The more intriguing aspect of this story is whether the VTL cables business is beginning a new chapter where favourable product mix, optical fibre demand trends, and specialty application demand drives disproportionately strong profits growth. Should such conditions prevail and Birla Cable consolidation deliver scale advantage without working capital challenges, then VTL might potentially evolve into a broader cable/infrastructure conglomerate.
For investors, the number to watch may therefore not be the merger date or even total revenue growth. It is whether cable EBIT can sustain the sharp improvement seen in Q1 FY27. That will determine whether the optical-fibre and EV bet is merely an attractive narrative or the beginning of a meaningful change in VTL’s earnings profile.