Prime Highlights:
- Polycab’s revenue grew 46% year-on-year, driven by strong demand in wires & cables and FMEG segments.
- Brokerages including Citi, Jefferies, and Morgan Stanley maintain positive ratings, with price targets above ₹9,200.
Key Facts:
- Operating margins declined slightly, with cables & wires down 150 bps and EPC segment down 210 bps, but overall growth remains strong.
- Analysts expect Polycab to benefit from private investment, housing, and infrastructure, projecting 25% annual earnings growth over FY25-28.
Background:
Shares of Polycab India Ltd. surged up to 5% on Monday after the company reported a robust revenue performance for the December quarter, surpassing market expectations. The Mumbai-based cables and wires maker posted a 46% year-on-year revenue growth, well ahead of analysts’ estimates of around 30%.
The growth came from strong results in the wires & cables segment and the FMEG business. The wires and cables segment grew 46% year-on-year, driven by higher sales and strong demand. The FMEG business also made a profit, boosting overall growth.
However, operating margins fell, dropping 110 basis points from last year to a five-quarter low. In detail, margins in cables and wires fell 150 basis points, while the EPC (Engineering, Procurement, and Construction) segment saw a larger drop of 210 basis points.
Polycab’s management said that growth is expected to stay strong in the March quarter. Price increases have already been implemented in January, with more planned to help improve margins, though they may still be lower than last year. The company added that rising commodity prices have not affected demand, and EPC margins are expected to stay in the high single digits over the medium to long term.
Brokerage firms remained bullish. Brokerages remain positive on Polycab. Citi kept a ‘Buy’ rating and raised its target price to ₹9,500, while Jefferies also has a ‘Buy’ rating with a target of ₹9,225, noting that the stock is still slightly below its five-year average despite a nearly 50% rally since March 2025.
Morgan Stanley rated Polycab ‘Overweight’ with a target of ₹9,373, citing strong growth in cables and wires but some margin pressure.
