MENU

Published on 2/06/2020 4:11:47 PM | Source: Yes Securities Ltd

Buy Polycab India Ltd For Target Rs. 857 - YES Securities

Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel  https://t.me/InvestmentGuruIndia 

Download Telegram App before Joining the Channel

* HIGHLIGHTS

* Revenue was weaker than expected due to sluggish domestic market and revenue loss of Rs6.1bn due to lockdown

* Export revenues jumped 3.4x yoy and was flat on a sequential basis led by execution of Dangote order and higher revenues from US. Company has executed orders worth Rs7.5bn of the total Rs11bn order from Dangote

Margins surprised positively led by improvement in product mix and price hikes taken in some FMEG segment

* PAT outperformance was aided by jump in other income (114.1% yoy) and higher margins (423bps yoy)

* Company has restarted all its manufacturing capacities and is gradually ramping up to meet demand from exports and Tier II/III towns

* Company is looking at expanding its reach in the export market (US$38bn opportunity) as consumers shift procurement from China

* C&W channel inventory is at normalized levels and lower in areas where demand has picked up in Q1

 

* Our View

* We believe earnings revival over the next 2‐3 years would be led by market share gains in the FMEG business.  

* We have cut our FY21/22 estimates by 34.5%/26.4% factoring in slower recovery in the housing wire segment

* We maintain our Buy rating on the stock with a revised target price of Rs857 (18x FY22E P/E)

 

* Valuation

Near term stock performance would be subdued due to concerns over demand revival in C&W segment. Valuation rerating would be gradual as FMEG share increases

 

* Risk to our call

* Sharp fall in Cables and Wires market

* Lower market share gains in FMEG segment

 

To Read Complete Report & Disclaimer Click Here

 

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

 

Above views are of the author and not of the website kindly read disclaimer