Mumbai: In the post-pandemic world, where homes turned into workspaces and streaming hubs, ultra-fast internet became a lifeline, tethering us to a digital reality. But behind those seamless connections lies the backbone of fibre optic networks, powered by companies like Birla Cable. Yet, even as the demand for digital infrastructure surges, Birla Cable finds itself navigating choppy waters. The company's Q2 FY25 financial results, released on October 24, show revenue climbing, but rising operational costs have squeezed profits, casting a shadow over an otherwise bright sector.
For Q2 FY25, Birla Cable reported a standalone revenue from operations of Rs 18,171.67 lakh, reflecting a 4 per cent year-over-year increase from Rs 17,470.86 lakh in Q2 FY24. Consolidated revenue also improved, reaching Rs 18,274.92 lakh, up from Rs 17,761.15 lakh in the same quarter last year. This proliferation in revenue, while encouraging, wasn’t sufficient to shield the company’s profit from erosion due to escalating costs.
Net profit for the quarter plummeted drastically to Rs 200.49 lakh on a standalone basis—a 62 per cent dip compared to Rs 529.80 lakh in Q2 FY24. The consolidated profit mirrored this trend, declining to Rs 181.97 lakh from Rs 504.65 lakh the previous year. The profit drop was intensified by rising raw material costs, which reached Rs 14,426.19 lakh for standalone operations—a 5.7 per cent increase from the preceding quarter.
Operational costs across the board contributed to the decline in profitability. Total expenses rose to Rs 18,013.94 lakh, a significant jump from Rs 17,060.28 lakh in Q2 FY24. Employee expenses stayed steady at approximately Rs 840 lakh, while finance costs soared to Rs 395.05 lakh from Rs 327.87 lakh in the previous year. Depreciation expenses added further strain, climbing to Rs 383.01 lakh, indicating investments in infrastructure that are yet to yield returns.
One bright spot was the other comprehensive income (OCI), which surged to Rs 1,683.36 lakh from Rs 661.69 lakh in the prior year on a standalone basis. However, this gain primarily reflected revaluations in investment portfolios and other non-core elements, which have limited impact on operational performance.
The cash flow statement shows a decline in cash and cash equivalents to Rs 10.19 lakh by the end of Q2, a stark reduction from Rs 23.30 lakh in the same period last year. This drop stems from increased operating expenses and reduced cash generation, with net cash flow from operating activities down to Rs 5,082.14 lakh. This cash compression hints at tighter liquidity, potentially influencing the company’s future capital expenditures.
Birla Cable’s Q2 FY25 financial results underscore a revenue-positive but profit-challenged quarter, reflecting the complex interplay of market demand and rising costs. As a leader in India’s cable manufacturing sector, Birla Cable’s future profitability will likely depend on its capacity to manage costs amidst fluctuating raw material prices and financial expenses. While revenue growth suggests demand resilience, sustaining profitability will require cost discipline and a favourable macroeconomic environment.
