Delton Cables (BSE: 504240) is a veteran in the Indian low-voltage cables market, with a rich history spanning over 75 years. The company has successfully transformed itself from a telecom cables specialist into a customized branded supplier for high-growth sectors like railways, EPC, telecom etc. 7813ad17-09d5-4d2f-9156-bf95edd2cd62.pdf (bseindia.com)
Positives:
Diversified Product Portfolio: The company’s versatile range of cables caters to diverse industries, including EPC, Railways, Telecom and in future, possibly into emerging sectors like Nuclear and Defense
Asset-Light Expansion: Delton’s phased capex plan and focus on an asset-light model aim to improve asset turnover and capacity utilization, which stood at 76% in FY24.
Improving Working Capital: The company has reduced its working capital cycle from 218 days in FY22 to 138 days in FY24, supporting its future growth.
Transformation & Growth: Delton has now focused on large private EPC players, added new management talent, and built a niche product portfolio targeting high-growth segments to drive revenue growth, profitability, and working capital efficiency.
Negatives:
Raw Material Price Volatility: Delton’s profitability is susceptible to fluctuations in the prices of key raw materials like copper and aluminium.
Risks:
Increasing Competition: The company faces competition from both organized and unorganized players in the cables and wires industry. Delton having a very small mcap, has limited ammo to indulge in a pricing war.
Execution Challenges: The success of Delton’s new manufacturing facility for EPC cables, expected to commence production in September 2024, will be crucial to its expansion plans.
Overall, Delton Cables appears well-positioned to capitalize on India’s infrastructure growth story, given its diversified product offering and asset-light expansion strategy. What makes it stand out is it’s relatively lower Price to Sales of around 1, and a it’s board has some names with good industry experience, which gives some confidence while investing.
Hi @SA24,
I found this company interesting after the conviction u had, but couldn’t research more as there is little to no info available.
Can u share the reasons behinds why do u think this company has the potential to grow?
Hi @sainath_reddy ,
Less information is a problem that bugs me too when it comes to this stock, hence I had taken out my invested amount when the stock more than doubled. Now, just the profit is invested, and I am comfortable holding it at least a few quarters to see how things unfold.
Thesis remains the same as the first post in this thread. Micro-cap company, in a ‘rising tide’ sector, good capex and revenue guidance. Their asset-light model gives some comfort, and management looks fine as well.
I was looking for a micro-cap to invest and decided to make a bet on this. Experienced people may say not a good move when info is less, but I have nothing to lose on it now after booking profits.
