Finolex Cables Downgraded to Sell Amid Technical Weakness and Flat Financials

Quality Assessment: Mixed Fundamentals with Flat Recent Performance

Finolex Cables’ quality metrics present a nuanced picture. The company reported flat financial results for the second quarter of FY25-26, signalling a pause in growth momentum. Return on Capital Employed (ROCE) for the half-year period stands at a modest 15.10%, marking the lowest level in recent times and raising concerns about capital efficiency. Meanwhile, cash and cash equivalents have dwindled to ₹54.94 crores, indicating tighter liquidity conditions.

Despite these near-term challenges, the company maintains a low average debt-to-equity ratio of zero, underscoring a conservative capital structure that mitigates financial risk. Long-term growth remains healthy, with net sales expanding at an annualised rate of 18.54% and operating profit growing at 15.02% per annum. Return on Equity (ROE) is at 11.6%, reflecting moderate profitability relative to shareholder funds.

However, the recent flat quarter and declining profitability—profits fell by 5% over the past year—have weighed on the quality grade, contributing to a cautious stance on the stock’s fundamentals.

Valuation: Attractive Yet Reflective of Underperformance

From a valuation perspective, Finolex Cables trades at a Price to Book Value (P/BV) of 2, which is considered attractive relative to its historical peer averages. This valuation suggests that the market is pricing in some of the company’s challenges while recognising its underlying asset base and growth potential.

Nonetheless, the stock’s recent price performance has been disappointing. Over the last year, Finolex Cables has delivered a negative return of 29.49%, significantly underperforming the BSE Sensex, which gained 6.63% over the same period. The stock’s 52-week high was ₹1,059.05, while it currently trades near ₹730.45, closer to its 52-week low of ₹708.00, reflecting investor caution.

Institutional investors hold a substantial 25.19% stake, indicating confidence from sophisticated market participants who typically conduct rigorous fundamental analysis. This institutional backing provides some support but has not been sufficient to arrest the stock’s recent decline.

Financial Trend: Underperformance and Profit Pressure

Examining the financial trend, Finolex Cables has struggled to keep pace with broader market indices and sector benchmarks. The stock’s returns over various time frames highlight this underperformance:

• 1 week: -4.12% versus Sensex -1.73%


• 1 month: -7.07% versus Sensex -3.24%


• Year-to-date: -2.55% versus Sensex -3.57%


• 1 year: -29.49% versus Sensex +6.63%


• 3 years: +31.22% versus Sensex +35.56%


• 5 years: +93.50% versus Sensex +65.05%


• 10 years: +244.96% versus Sensex +241.54%

While the company has delivered strong long-term returns over five and ten years, recent years have seen a marked slowdown, with the one-year return significantly lagging the benchmark. This deceleration is compounded by a 5% decline in profits over the past year, signalling margin pressures or operational challenges.

The flat quarterly results and declining profitability have contributed to a deteriorating financial trend, prompting a more cautious outlook from analysts.

Technical Analysis: Shift to Bearish Signals

The most significant factor driving the downgrade to Sell is the deterioration in technical indicators. The technical grade has shifted from mildly bearish to outright bearish, reflecting weakening momentum and increased downside risk.

Key technical signals include:

• MACD: Weekly remains mildly bullish, but monthly is bearish, indicating longer-term negative momentum.


• RSI: Both weekly and monthly show no clear signal, suggesting indecision but no strength.


• Bollinger Bands: Bearish on both weekly and monthly charts, signalling price pressure and volatility expansion to the downside.


• Moving Averages: Daily averages are bearish, confirming short-term weakness.


• KST (Know Sure Thing): Weekly mildly bullish but monthly bearish, reinforcing mixed but predominantly negative momentum.


• Dow Theory: Weekly mildly bearish, monthly no trend, indicating lack of clear directional strength.


• On-Balance Volume (OBV): Weekly no trend, monthly mildly bearish, suggesting weak volume support for price moves.

These technical signals collectively point to a bearish outlook, with the stock price recently falling 3.41% on the day to ₹730.45 from a previous close of ₹756.25. The trading range for the day was ₹720.40 to ₹755.00, reflecting volatility and selling pressure near resistance levels.

Market Capitalisation and Grade Context

Finolex Cables holds a Market Cap Grade of 3, indicating a mid-tier market capitalisation relative to its sector peers. The overall Mojo Score stands at 44.0, which corresponds to a Sell rating, down from the previous Hold grade. This downgrade was officially recorded on 20 Jan 2026, reflecting the combined impact of deteriorating technicals and flat financial performance.

The company operates within the Cables - Electricals industry and sector, where competitive pressures and commodity price fluctuations can influence margins and growth prospects.

Conclusion: Cautious Stance Recommended

In summary, Finolex Cables Ltd.’s downgrade to a Sell rating is driven primarily by a shift in technical indicators to bearish territory, flat recent financial performance, and underwhelming returns relative to the broader market. While the company’s long-term fundamentals such as low debt, steady sales growth, and attractive valuation metrics provide some support, the near-term outlook is clouded by deteriorating profitability and weakening price momentum.

Investors should weigh these factors carefully, considering the stock’s recent underperformance and technical signals before committing fresh capital. The presence of significant institutional holdings suggests that professional investors are closely monitoring developments, but the current environment favours a cautious or defensive approach.

Given the mixed fundamental backdrop and clear technical weakness, the Sell rating reflects a prudent recommendation to avoid or reduce exposure until clearer signs of recovery emerge.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →