Delton Cables Ltd — “500-Crore Borrowing Power, 2.0x Leverage, and a P/E Trying to Outrun Copper Prices.”
1) At a Glance
Delton Cables (BSE: 504240) is the grand old wire-and-cable shop from 1948 that’s suddenly discovered protein powder. Revenues have jumped to ~₹722 crore TTM with OPM parked near 7% and ROCE touching ~19%. The street still prices it like a growth tease: CMP ~₹668, EV/EBITDA ~14.4x, and annualised P/E ~47x (yes, based on the latest quarter). Debt’s not shy at ~₹184 crore (D/E ~2.04), but the company just switched on a new Palwal plant (Jun’25) and is chest-thumping a ₹500 crore borrowing limit. Translation: the throttle is open, the tank is copper. Will it be a clean highway or Gurgaon traffic?
2) Introduction
If Indian infra is the party, cables are the aux cable—indispensable and underappreciated until silence hits. Delton sells the whole platter: power/control cables, MV, instrumentation, solar AC/DC, railway signalling, telecom, building wires, and a masala box of niche specials (thermocouple, cathodic protection, lead-sheathed, the works). Switchgear exists, but let’s be honest—wires & cables ~94% is the headliner; switchgear barely clears the mic.
What’s changed? Scale and swagger. Sales went from ₹272 crore (FY23) → ₹401 crore (FY24) → ₹709 crore (FY25), with TTM ~₹722 crore even after a softer June quarter. New capacity is online (Palwal Plant III commercial since Jun 7, 2025), big customer names populate the brochure, and ratings are steady at IVR BBB/Stable; A3+ on the working-cap kitty. Also: working capital discipline improved (WCD down to ~21 days in FY25; CCC ~101 days), which for a cable maker is like getting your gym form right—less injury, more reps.
But the detective in us spots fingerprints: interest coverage ~1.65x, D/E ~2.04x, and a board-approved ₹500 crore borrowing headroom. That’s not a red flag; that’s a red carpet for execution risk. Copper prices twitch, project timings slip, collections stretch—and suddenly your P&L is doing Garba.
Question: In a commodity-flavoured business, do you prefer volume growth with leverage, or slower growth with monk-like balance sheets?
3) Business Model – WTF Do They Even Do?
Short answer: convert copper, aluminium, polymers, and standards into kilometres of compliant cable for power, rail, infra, and industry—and collect cash before the next tender forgets your name.
Products: Power & control, MV, instrumentation, railway signalling, telecom/data (Cat5/6), solar AC/DC, rubberised, lead-sheath, coaxial, welding, CP cables; small switchgear line (MCB/RCCB/MCCB/DBs).
Revenue Mix (historical): Wires & Cables ~94% dominate; traded/scrap a few points; switchgear ~1%.
This is a spec-in, audit-heavy, execution-timed business. Win tenders, comply with standards, source copper smartly, run plants, ship on time, and pray working capital returns before your banker calls. Simple? Only on PowerPoint.
Your take: Would you push the switchgear line for higher margins, or double down on high-spec cables where Delton already has muscle memory?
4) Financials Overview
Quarterly Snapshot (₹ crore unless stated)
Metric
Latest Qtr (Jun’25)
YoY Qtr (Jun’24)
Prev Qtr (Mar’25)
YoY %
QoQ %
Revenue
156.33
143.48
202.23
8.96%
-22.7%
EBITDA (OP)
13.30
9.56
15.75
39.1%
-15.6%
PAT
3.08
3.02
5.64
1.99%
-45.4%
EPS (₹)
3.56
3.50
6.53
1.7%
-45.5%
Annualised EPS (latest qtr × 4) = ₹14.24 → Re-calculated P/E @ ₹668 ≈ 46.9x. (If this were negative, we’d say “P/E not meaningful.” Today it’s “P/E not merciful.”)
Detective’s note: YoY looks healthy; QoQ shows the seasonal/downshift after a heavy Mar’25. New plant should change the slope in coming quarters—if utilisation ramps and financing doesn’t eat the appetizer.
5) Valuation – Fair Value Range only
We’ll triangulate with P/E, EV/EBITDA, and a back-of-the-envelope DCF. Facts on table: EV ~₹749 cr, EBITDA TTM ≈ ₹52 cr (implied by 14.4x), Debt ~₹184 cr, shares ~0.86 cr.
A) P/E
Annualised-Latest EPS ₹14.24; apply a sensible small-cap range 20–30x → ₹285–₹427.
Equity value cluster ~₹300–₹550 cr → per share ₹350 – ₹640.
Blended Fair Value Range (education-only): ₹300 – ₹550
Sits where P/E mid-band meets EV/EBITDA/DCF pragmatism, with a “debt + execution” haircut.
This fair value range is for educational purposes only and is not investment advice.
Question: Which multiple would you trust for a leveraged cable maker—P/E (earnings noisy) or EV/EBITDA (plant reality)?
6) What’s Cooking – News, Triggers, Drama (≈300 words)
New Capacity:Palwal Plant started commercial production 7 Jun 2025. That’s your volume trigger; now watch utilisation and product mix (MV, rail/solar, high-spec).
FY25 Poster: Revenue ₹710.9 cr (+76%), PAT ₹20.5 cr (+40%); final dividend ₹2/share, new CFO, and the board raised borrowing powers to ₹500 cr. If growth is a highway, this is the Fastag lane.
Ratings Check:Infomerics reaffirmed IVR BBB/Stable & A3+ (2 days ago). Stable outlook, but leverage and interest cover are the chaperones at this party.
Orders/Leases: Earlier large order ₹177.8 cr (FY24), and new industrial property lease in Feb’25 for expansion. The intent is clear: multi-plant, multi-customer throughput.
Regulatory items: From SC dismissing a legacy tax recovery to CESTAT relief on a tiny excise issue—nothing thesis-breaking; just housekeeping.
What to monitor next 3–4 quarters:
Gross margin trajectory vs copper—pass-through discipline.
OPM ≥ 8% and ICR > 2x as the new plant warms up.
Working capital days—can they hold ~20–25 while scaling?
Order mix—rail/solar/instrumentation can nudge margins up versus plain-vanilla power cable.
Spice: If the company lands another three-digit crore order while keeping WC tight, EBITDA math starts behaving. If not,
