Orient Cables IPO: 42% Sales Growth, Flat Profit, Negative Cash, and a 57x P/E

1. IPO Overview

Orient Cables (India) Limited is listing on the mainboard of BSE and NSE through a 100% book-built offer opening September 25 and closing September 29, 2026, at a price band of Rs 258 to Rs 272 a share of face value Re 1.

The total offer aggregates up to Rs 552 crore, split into a fresh issue of up to Rs 320 crore and an offer for sale, which means shares sold by existing owners, of up to Rs 232 crore.

At the top of the band, Rs 272 a share, the company is valued at Rs 3,095.35 crore on post-issue shares. The unusual feature is that FY24-FY25 are audited on standalone basis while FY26 and the June 2026 quarter are consolidated, so trends are not strictly like-for-like.

2. What the company does

A B2B maker of networking and fibre cables

Orient Cables has made cables for nearly two decades and focuses on networking cables and passive connectivity. It does not sell to households. It designs, makes and tests customised cables for telecom operators, telecom equipment makers, IT providers, data centres, power utilities, original equipment makers and resellers for broadband, 5G, data centres, smart buildings, renewable energy and automotive uses.

The sales cycle is order by order. A customer sends a specification for conductor, shielding, fire and smoke performance and connectors. The company builds samples, passes plant audits and often third-party tests abroad, then receives purchase orders that fix price and delivery. Onboarding can take about six months. There are no disclosed long-term take-or-pay contracts, and some orders can be cancelled or carry penalties for delay.

What it sells and where growth came from

Revenue is reported in four lines, and two lines dominate.

Networking cables mean CAT5, CAT5e, CAT6 and CAT6A in shielded, unshielded, outdoor and armoured versions, plus patch cords, CCTV and coaxial cables and antenna-control assemblies. This core was 78.23% of FY26 sales and 68.60% in the June stub.

Specialty power and fibre was the FY26 accelerator, rising 155.30% to Rs 250.39 crore and lifting its share to 21.37% in FY26 and 31.23% in the stub. Power covers instrumentation, control and low-tension cables. Fibre covers single-tube cables for last-mile and multi-tube cables up to 288 fibres for trunk, towers, railways and data centres.

Harness, EV charging guns, keystone jacks, power strips, solar boxes, irradiated cables and tethered drones are nascent. Harnesses did Rs 15.20 lakh in FY26. Keystone jacks did Rs 4.54 crore. Drones have done Rs 1.21 crore of orders since August 2025. No segment margins are disclosed.

Who buys and how concentrated it is

The top 10 customers were 76.52% of FY26 revenue and 84.00% in the June stub. The largest customer alone was 25.75% in FY26 and 38.54% in the stub. Two customers above 10% each were about 43.55% in FY26 and about 53.32% in the stub. Retention looks sticky, with 93.92% of FY26 sales from repeat top-50 buyers and average top-10 relationships above nine years, but orders remain cancellable.

End-use has swung from broadband at 57.27% in FY25 to telecom at 32.45% in FY26 and 43.17% in the stub. Domestic sales were 90.74% in FY26 and 93.00% in the stub. Exports, mainly UAE and Qatar, fell to 9.26% and then 7.00%. Payment is typically up to 90 days.

How it makes it and whether plants are full

The company runs two plants at Bhiwadi in Rajasthan and a third at Bengaluru that started in May 2026. It draws copper in-house, compounds PVC, makes reinforcement rods and yarns, and now operates an electron-beam line for treated cables. Annualised capacity at June 30, 2026 was 895,776 kms.

Total cable utilisation was 74.45% in FY24, 80.75% in FY25, 69.85% in FY26 and 71.04% in the three-month stub, which is not annualised. Unit I was 81.40% in FY26 and 93.32% in the stub, while Unit II was 65.25% and 64.67%. Allied pieces for jacks were only 6.18% utilised in FY26. Materials are 79% to 82% of revenue, so full plants and copper pass-through decide profit.

3. Use of Funds

The fresh issue will fund the company, while the Rs 232 crore offer for sale goes to selling shareholders and not to the company.

• Rs 91.50 crore for machinery, equipment and civil works at manufacturing facilities
• Rs 155.50 crore to repay or prepay borrowings
• Balance for general corporate purposes, amount not disclosed

4. Financials Overview

FY24 and FY25 are standalone for 12 months each. FY26 and the June 2026 quarter are consolidated and include subsidiary OCL Greentech from May 5, 2025. The June column is a three-month stub, a short period that cannot be compared to a full year.

Three-month stub, not annualised; FY24-FY25 standalone versus FY26 consolidated.

Sales grew about 42% in FY26, but operating profit grew only about 15% and owners profit was almost flat. Margins fell in FY26 after rising in FY25, while working-capital days doubled and leverage rose toward 1x.

5. What the financials tell us

Orient sold a lot more cable but kept almost none of the extra profit, turned almost none of it into cash, and funded the gap with short-term debt while relying on two buyers for almost half of sales.

Sales jumped but profit stood still

Revenue rose from Rs 824.96 crore in FY25 standalone to Rs 1,171.65 crore in FY26 consolidated, while pre-tax profit moved only from about Rs 71.70 crore to about Rs 72.60 crore. Total profit moved from Rs 53.32 crore to Rs 53.56 crore. Materials, finance cost and depreciation grew faster than sales, so gross and operating margins compressed. This reads as growth without pricing power, not operating leverage, though the standalone-to-consolidated change limits precision.

Two customers now carry almost half the business

Two buyers above 10% each were Rs 510.26 crore, or about 43.55% of FY26 consolidated revenue, up from about 30% in FY24. In the three-month stub they were about 53% of sales. The top 10 were 76.52% in FY26 and 84% in the stub, with the largest alone at about 26% and then about 39%. Losing or repricing one contract would reprice the whole business because no diversified base exists to absorb it.

Reported profit did not arrive as cash

Over three full years, total profit was about Rs 147 crore against operating cash of only about Rs 5.80 crore. Operating cash before working-capital moves still rose to Rs 105.17 crore in FY26 consolidated, but receivables and inventories absorbed more than that amount. Receivables plus inventory less payables locked up about 20% of sales in FY26 versus about 9% in FY24, while payables fell in absolute terms as sales rose about 78%. Capex of Rs 73.04 crore in FY26 left free cash deeply negative.

Short-term borrowings paid for the shortfall

Total borrowings built from Rs 36.73 crore at March 2024 standalone to Rs 234.19 crore at March 2026 consolidated, with about 85% current at year-end and about 87% at June 2026. FY26 was funded by short-term loans of Rs 57.49 crore plus supplier finance of Rs 54.97 crore. Cash interest paid rose from Rs 5.05 crore in FY24 to Rs 18.20 crore in FY26 plus Rs 7.78 crore in just three months to June 2026. Letters of credit were Rs 108.85 crore at March 2026, about 46% of equity, and capital commitments jumped to Rs 34.01 crore by June.

Margins, filings and one-offs make the numbers harder to trust

The June stub earned Rs 32.78 crore, over 60% of FY26 profit on about 42% of FY26 sales, with EBITDA margin at 11.22% versus 8.23% in FY26. There is no prior-year stub to judge seasonality, so the spike should not be annualised. FY26 other income was Rs 10.02 crore, about 14% of pre-tax profit, including forex gains of Rs 3.23 crore and miscellaneous income of Rs 2.85 crore versus Rs 5.30 lakh in FY25. Bank filings for March 2026 receivables were about 14% above unaudited books, and restated receivables were well below books. Opaque other financial assets rose about seven-fold since FY24.

The group is simple, so the price buys the parent alone

Consolidated FY26 revenue was Rs 1,171.65 crore while 51%-owned OCL Greentech did Rs 15.20 lakh with a loss of Rs 51.40 lakh. Minority interest was negative Rs 25.20 lakh on profit and negative Rs 22.70 lakh on equity, so owners profit of Rs 53.81 crore slightly exceeds total profit of Rs 53.56 crore. The 50% joint venture Corelink was formed after June 2026 with no investment recognised at June. Basic earnings of Rs 5.27 are therefore on 102,035,000 pre-issue shares with no dilution.

6. Valuation Analysis

For a profitable manufacturer, earnings multiple is the right lens. At Rs 258, post-issue market value is Rs 2,952.50 crore with a price-to-earnings ratio of 54.9x on reported FY26 owners profit of Rs 53.81 crore. At Rs 272, market value is Rs 3,095.35 crore with a P/E of 57.5x.

After removing just the Rs 2.85 crore miscellaneous spike at 26.22% tax, adjusted owners profit is Rs 51.71 crore and the P/E rises to 57.1x at Rs 258 and 59.9x at Rs 272. The pre-issue P/E on prospectus earnings of Rs 5.27 on 102,035,000 shares is 49.0x to 51.6x, but that flatters by ignoring fresh-issue dilution. Price-to-book post-issue is 5.0x to 5.3x on post-issue net asset value of Rs 51.45 to Rs 51.74, versus pre-issue Rs 26.34.

That is a 15% to 20% premium to the peer median of 47.84x on reported earnings and 19% to 25% on adjusted earnings. It looks unearned because FY26 sales grew 42% with almost no profit growth, margins and returns fell, operating cash was negative Rs 26.64 crore, leverage was 0.94x, and two customers drove over two-fifths of sales.

7. Peer Analysis

Peer P/Es use NSE close on September 7, 2026 divided by FY26 diluted earnings. Orient post-issue uses band price times post-issue shares divided by FY26 owners profit. Pre-issue like-for-like Orient is 49.0x to 51.6x.

Source: RHP — Comparison of our key performance indicators with listed industry peers; pages 149-151.

Orient and Paramount grew fastest on two-year sales at about 33.5% and 33.7%, ahead of Polycab at 26.5% and RR Kabel at 21.4%. But Orient compressed in FY26 while RR, KEI and Polycab expanded or held margins. Orient still shows the highest FY26 return on equity at 25.84%, yet it fell from 37.26% as equity stayed small and leverage rose.

Against large peers, Orient is narrow and small at Rs 1,171.65 crore versus Polycab at Rs 28,883.79 crore and KEI at Rs 11,747.76 crore. Polycab held EBITDA near 13.9% with net cash, KEI expanded to 11.81% with debt-to-equity of 0.03x, and RR improved to 7.90% with debt-to-equity of 0.06x. Orient fell to 8.23% with debt-to-equity of 0.94x and debt-to-EBITDA of 2.31x. Paramount, the only equal-growth peer at 33.47x P/E, also compressed but carries far lower leverage and longer working days. Finolex grows slower but earns higher bottom-line margins. Overall, the premium is not earned on risk-adjusted cash conversion, leverage or customer breadth.

Peer figures above come from peers' own exchange filings, while Orient figures are from its draft prospectus, except this growth table where both sides come from the draft prospectus.

8. Moat

Orient has a narrow, relationship-based edge rather than pricing power. It holds about 22.9% of Indian networking cables among the top four, wins custom work that needs six-month qualification and certifications, and keeps top buyers for over nine years on average. That deters casual entry but does not offset concentration, since two buyers and copper suppliers can still squeeze terms.

9. Risks

• Customer concentration: Top 10 at 76.52% in FY26 and 84% in the stub, with the largest at 25.75% rising to 38.54%, means one lost purchase order strands stock and sales. Long tenure mitigates but does not remove cancellable orders. This is idiosyncratic.
• Input and supplier risk: Top 10 suppliers were 69.71% in FY26 and 74.91% in the stub, with copper linked to global prices and no hedging disclosed. A spike not passed through hits margins directly. This is partly industry-wide but worse here due to 80% material intensity.
• Core-product reliance: Networking cables were 78.23% in FY26. A delay in broadband, fiberisation or data-centre spend hits disproportionately while new lines are tiny. This is idiosyncratic versus diversified peers.
• Cash and leverage: Two years of negative operating cash, debt-to-equity near 1x, interest cover halved to 4.80x, plus Rs 100.95 crore of letters of credit at June 2026, can force rollover and asset enforcement. The Rs 155.50 crore IPO repayment only buffers. This is idiosyncratic.
• Reporting and governance: Bank receivables filings exceeded books by about 14% at March 2026 with re-printed differences, other assets swung sharply, and trademark, wilful-defaulter and licence delays persist. This is idiosyncratic and weakens trust in collateral and earnings.

10. Verdict

The call rests on four load-bearing facts: FY26 sales of Rs 1,171.65 crore produced almost no extra profit, two customers drove about 43.55% of sales, operating cash was negative Rs 26.64 crore with leverage at 0.94x, and the post-issue P/E is 54.9x to 57.5x, or 57.1x to 59.9x after the miscellaneous spike. Together they show scale without cash-backed earnings at a premium to peers. The thesis works only if utilisation of Unit II recovers, telecom demand sustains pass-through, and receivables convert so debt falls after the Rs 155.50 crore repayment. It breaks if one large buyer reprices or working capital stays near 48 days, because interest then consumes the thin margin.

11. IPO Snapshot