Polycab India Share Price Falls After Q2 Margin Miss

Polycab India Ltd.'s share price fell over 7% on Friday after the company's second quarter margins contracted and missed estimates, due to a weak cable and wire segment. Margins of the cable and wire segment dragged due to high competition and lower contribution from domestic distribution, and mix change, Jefferies said in a note Thursday.

However, the brokerage reiterated a 'buy' rating on the stock and raised the target price to Rs 8,315 per share from Rs 7,970 apiece, as Polycab India was able to deliver profit in line with Jefferies' estimates. The current target price implies a 16.77% upside from Thursday's closing price.

Other than high competition from domestic high margin business, higher employee expense also weighed on Polycab India's Ebitda margin, Motilal Oswal Financial Services said. The brokerage refrained from changing its 'buy' rating. It had a target price of Rs 8,550 per share, before the conference call of Polycab India.

Fast–moving electrical goods segment reported healthy sale but loss continued, Jefferies said. Fans segment lead growth, however, light and luminaries sales weighed.

Meanwhile, Polycab India reported its highest ever second quarter sales, on the back of support from domestic cables and wire segment, Jefferies said. Its consolidated net profit grew 3.48% year-on-year to Rs 445 crore versus Rs 430 crore.