Polycab Q2 Results Review - Capex Led Strong Revenue Growth Momentum To Continue: ICICI Securities

ICICIS Securities Report

Takeaways:

1. Polycab India Ltd. reported robust broad-based revenue growth YoY led by favorable demand tailwinds. All segments reported strong double digit revenue growth YoY.

2. Ebitda margin at 11.5% (-295bps YoY) was at two-year low. We reckon high volatility in commodity prices and inferior product mix weighed on margins. Revival in contribution of high margin domestic wires and cables led by reduction in low margin EPC business may lead to Ebitda margin expansion in FY26.

3. FMEG segment reported strong revenue growth at the cost of margins. We reckon the trend may continue in near term as the company aims to expand its market share.

4. Capex intensity has remained high.

Polycab is on track to spend Rs 10- 11 billion in FY25, highlighted by Rs 5.8 billion on capex until Sep’24. We believe the strong revenue growth trajectory may continue in FY25E led by favorable demand tailwinds. Maintain Hold.

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