Polycab India Ltd. share price target

Initiating Coverage Report

Sharp recovery in EBITDA margins (expanded 413bps YoY) and strong revenue growth in FMEG segment (60.6% YoY), though on low base, enthuses us. Input material prices are now stabilizing; price hikes during the quarter and operating leverage resulted in higher profitability for the company.

POLYCAB: Resilient margins offset moderation in revenue

Pricing action, cost-cutting initiatives and premiumization all helped to keep margins intact in Q1

Polycab India’s double digit volume growth led by distribution expansion and new product launches resulted in market share gains in organised wires and cables segment in FY22. It also launched an economy segment brand Etira, with housing wires and plans to expand its product portfolio aggressively to gain market share in semi-urban and rural areas.

Maintains leadership in wires & cables with ~23% market share; growth momentum in FMEG business sustained in FY22 (5Y CAGR of 30%)

Polycab reported strong revenue growth of 34.9% YoY in Q4FY22, but gross margins contracted 354bps YoY due to higher input inflation and limited price hikes. The company continues to steadily expand its distribution network, which will likely result in continued volume growth.

Strong quarter with the core cable and wire business performing well on revenue and margins, beside maintaining market leadership

s. Wires business was slightly impacted due to high volatility in copper prices in early November that cascaded the inventory levels thus slowing cash cycle. Yet, blended price hikes improved sequential EBIT by...

We recommend a Buy the stock for a target price of Rs 2,640 implying an upside of 11% from CMP.

Polycab is the market leader in the wire & cable business with organised market share of 23%. In the FMEG segment, it is growing through new product launches and dealer addition across India. The company has...

Polycab witnessed another quarter of strong recovery in demand across segments resulting in a topline growth of c.12% and 22% sequentially and yoy respectively. The company continued reporting higher quarterly revenues for the second consecutive quarter with topline of 3,372 crs where wires & cables (w&c) contributed around 88% followed by FMEG c.10%. In this quarter,...

We cut our FY22/FY23/FY24 earnings by 4.1%/ 5.1%/ 4.5% largely on account of 1) inflationary input cost environment led margin pressure and 2) impact of Ryker (Copper segment) divestment. Polycab remains optimistic on the demand scenario further buoyed by strong bounce back in the institutional segment and expects to exit FY22 with margins at 11%. Although FMEG margins were a disappointment as Polycab continues to restructure the...

We value Polycab at 27x FY24 EPS of Rs 92.3 to arrive at target price of Rs 2,490/share (vs. Rs 2,575/share earlier),implying an upside of 4% from CMP. Hence, we recommend HOLD rating on the stock at current levels.

Strong revenue growth; input inflation drags margin company also entered the fast moving electrical goods (FMEG) space in 2014 and has recorded strong segment revenue CAGR of 43% in the last five years....

Maintains high single digit FMEG margin guidance in 2 years; 10-12% by FY26 We cut our FY22 earnings by 13.4% given 1) RM volatility led margin pressure and 2) focus on topline growth and market share gains in the near term. However, thereafter, we expect margins to recover gradually and remain structurally positive on longer term prospects given 1) sustained increase in...