Polycab Q3 Results Review - Strong Volume Growth In Cable and Wire; Fmcg Disappoints: Dolat Capital

Dolat Capital Report

Polycab India Ltd. continued momentum in cable and wire with 17% YoY growth (four year compound annual growth rate of 16%) in Q3 led by 20% volume growth in domestic business. Fmcg was a dampener with 13% YoY revenue decline and widened operating losses of Rs 366 million.

Gross margin improved 130 basis points, however, Ebitda margin fell 40 bps to 13.1% in Q3 mainly due to higher advertising and promotion spends.

With structural drivers in place, strong traction in cable and wires segment is expected to continue. Polycab India is confident of achieving targeted revenue of Rs 200 billion ahead of FY26E timeline.

Polycab’s management has clarified that it has not received any official communication from information technology department regarding outcome of searches conducted and that its operations are on track.

We have slightly tweaked our earning per share estimates for FY24E/25E/26E to Rs 110/131/154 respectively.

At current market price, the stock is trading at a discount to peers. We have cut our price/earning to 32 times FY26E (from 37 times) to factor in the uncertainties related to Income Tax raid.

Maintain 'Accumulate' with a reduced target price of Rs 4,974 (versus Rs 5808 earlier).

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