Trying to search for the holes in the story - a few points from my side.
Finolex is not a superbrand anymore. After getting the awards for three sonsecutive terms (from 2004 to 2008), they were not included in Superbrand category in the latest edition of December 2012. [Source:http://www.superbrandsindia.com/consumer_4th_2012.html]
Remuneration to Executive Directors: 8.5 Cr out of a NP of 98 Cr - A small red flag.
Increase in NP in FY12 is mainly because of 7.92 Cr of MAT Credit entitlement, which was not available in FY11. Otherwise PBT in FY12 was only 109.3 Cr as against 107.2 Cr for FY11.
Revnue from traded goods decreased to 2151 Cr in FY12 from 2155 Cr in FY11 despite increase in Sales Incentives to 104 Cr from 82 Cr. Advertisement and Publicity expenses increased tp 104 Cr from 77 Cr.
For digging deep into the story, I tried to compare the segment-wise revenue in past 5 quarters. Since they have two primary segments (Elect. and Communication Cables, I have simplified the analysis by ignoring other segments).
| Q2-12 | Sales | PBT | Gross Margin | %Sales |
| Elect. Cables | 4123 | 485 | 11.8% | 92.0% |
| Commun. Cables | 358 | 26 | 7.3% | 8.0% |
| 4481 | ||||
| Q3-12 | ||||
| Elect. Cables | 4172 | 453 | 10.9% | 91.1% |
| Commun. Cables | 406 | 25 | 6.2% | 8.9% |
| 4578 | ||||
| Q4-12 | ||||
| Elect. Cables | 5059 | 640 | 12.7% | 93.2% |
| Commun. Cables | 370 | 38 | 10.3% | 6.8% |
| 5429 | ||||
| Q1-13 | ||||
| Elect. Cables | 4563 | 552 | 12.1% | 92.4% |
| Commun. Cables | 376 | 29 | 7.7% | 7.6% |
| 4939 | ||||
| Q2-13 | ||||
| Elect. Cables | 5141 | 626 | 12.2% | 91.5% |
| Commun. Cables | 479 | 92 | 19.2% | 8.5% |
| 5620 |
The Inferences:
The assumption that they are targeting Communication Cable market is not true. The %age of sales for both segments is almost constant.
The good performance of Q2-13 is primarily on account of improved gross margin in Communication Cable segment. If you look closely in past quarter, it doesn't appear to be a permanent trend. This sudden improvement in gross margin needs to be explored further - if it is a permanent feature, then the story is good.
Their are no traces of improved efficiencies in Elect. cables segment, which earns most of their revenues.