Polycab India Ltd.'s market capitalisation overtook that of Havells India Ltd. by 0.04% to hit Rs 84,728 crore on Monday.
A year ago, the market cap of Havells stood at Rs 73,133 crore, which was 73% higher than that of Polycab.
Both companies belong to the electrical equipment manufacturing industry. However, Havells is mainly into fast-moving electric goods, while Ploycab is more into cable and wires. FMEG's contribution to Havells' revenue was approximately 40%, versus Polycab's 8%.
Stock Movement
Polycab's shares have risen 102% in the past year, while Havells' stock has seen a 15% jump in the same time period.
The five-year returns of Polycab's stocks have gained over 782%, compared to Havells' 88%.
What Has Worked For Polycab?
The company has adopted a price laddering strategy to cater to its diverse customer base. They have introduced the Etira, Optima and Green Wire ranges over the past few months to cater to customers across different segments. In the first half of the year, these ranges collectively accounted for 30% of the sales.
Polycab's strategy of leveraging cross-selling through wire distributors has also shown positive results, the company's management said during an analyst meeting on Oct. 19.
This growth can be attributed to the benefits of channel realignment, new product development, developing in-house capacity and various other initiatives implemented over the past few quarters, which are now beginning to materialise, Polycab said.
Fundamentals And Valuations
For Polycab, the revenue CAGR for FY21–24E stood at 26%, as against that of Havells at 22%, as per Bloomberg.
Polycab's Ebitda margins for Q2 FY24 stood at 14.4%, compared to Havells' at 9.6%. This is mainly because Polycab deals mostly in a business-to-business format, while Havells uses the retail model of distribution.
Estimated EPS for FY24 for Polycab is at 52.9 and that of Havells is 78.6.
Analyst Recommendations
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