Finolex Cables 60% Rally Still Cheap at 21x PE; Jefferies Sees OFC Earnings Surge

The Quick Take

• Finolex Cables has surged 60% year-to-date but trades at only 21x one-year forward PE, a discount to peers
• Jefferies sees a significant upcoming earnings surge in Finolex's optical fiber cable division
• The stock's discount to sector peers persists despite the strong rally, suggesting further re-rating potential

Finolex Cables has delivered a 60% year-to-date return, among the strongest in India's cables and wires segment, yet it trades at approximately 21x one-year forward earnings — a discount Jefferies characterizes as notable relative to sector peers. India's cables and wires sector is a prime beneficiary of the capex supercycle, infrastructure buildout, and rising demand for optical fiber cable driven by telecom network expansion and data center connectivity requirements across tier-2 and tier-3 cities, creating a structurally favorable demand environment for the next three to five years.

Jefferies' thesis centers on an earnings acceleration in Finolex's optical fiber cable division, where demand from 5G infrastructure rollout and enterprise connectivity is compressing order backlogs. If the anticipated OFC earnings surge materializes, it provides a credible re-rating catalyst that would bring Finolex closer to peers trading at a premium. The broader cables sector benefits: Polycab, KEI Industries, and Havells share the same structural demand drivers. A sustained rally in Finolex reinforces institutional confidence in the sector's earnings visibility and attracts incremental FII allocation to infrastructure-linked consumer durables.

Key upcoming signals include Finolex's September-quarter earnings, which will provide the first material evidence of whether the OFC earnings surge Jefferies anticipates is reflected in reported revenue and margins. Watch order book announcements from major telecom operators — BSNL's fiber expansion contract awards remain a significant catalyst. The macro variable is India's infrastructure spending pace: if Union Budget capex allocation is disbursed on schedule, cables demand remains elevated. Valuation re-rating to peer multiples (30x+ forward PE) provides a specific numeric milestone for tracking whether the Jefferies thesis is on track.

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