Add Polycab India Ltd For Target Rs. 9,800 by InCred Equities
Momentum intact; upgrade to ADD
* Consol. 2QFY27 revenue/EBITDA/PAT grew by 53%/39%/43% yoy (10%/16%/17% above our estimates), driven by all-round performance.
* Management reiterated confidence in sustaining 1.5x industry growth in C&W segment and 1.5-2x in FMEG, supported by industry tailwinds.
* We raise our FY27/FY28F EPS by ~11%/4% (largely on 2Q beat; positive outlook) & lower our FY29F EPS by ~2%; upgrade to ADD with TP of Rs9,800.
Broad-based growth; beat led by C&W and FMEG segments
Polycab India reported strong 2QFY27 results, with revenue/EBITDA/PAT growing by 53%/39%/43% yoy (10%/16%/17% above InCred estimates, respectively), driven by healthy cable & wire (C&W) execution and FMEG segment’s growth. C&W revenue grew by 47% yoy to Rs83.8bn, with 14.2% EBIT margin (+89bp qoq). FMEG grew by 120% yoy to Rs9.9bn, with broad-based growth and a record 10.1% EBIT margin, while EPC revenue increased by 53% yoy to Rs6.2bn at 7.2% EBIT margin. EBITDA margin improved 53bp qoq to 14.4% aided by favourable mix and operating leverage. Exports grew by 17% yoy (+85% qoq), contributing ~5% to revenue. C&W volume growth was mid-to-high single digit on a high base, with wire outperforming cable.
Maintains guidance; new entrant impact yet to hit the industry
Management reiterated its target of growing C&W biz at 1.5x industry growth, with 11-13% EBITDA margin guidance through FY30F and comfort at the higher end. It expects healthy 2HFY27 demand, supported by power T&D, government capex, real estate, manufacturing and mobility segments, with data centres emerging as an additional opportunity. Export momentum is expected to improve, supported by a strong pipeline across 94 countries, despite geopolitical and shipping disruptions. FMEG remains on track to grow at 1.5-2x industry growth, while its 10.1% quarterly EBIT margin surpassed the FY30F EBITDA margin target of 8-10%. Despite new entrants, management has not observed market-wide pricing correction and Polycab India remains insulated amid UltraTech Cement’s entry in the C&W space, with the wire segment currently forming a very small portion of its overall business. With Rs45.2bn net cash, ongoing capacity expansion and an EHV facility targeted for FY28F, Polycab India is positioned to capitalise on structural electrification and infrastructure-related demand.
Upgrade to ADD rating with a lower target price of Rs9,800
We like Polycab India’s long-term growth prospects, supported by its leadership in the domestic C&W market, improving FMEG profitability, increased export opportunities and structural demand tailwinds. We had initiated coverage on the stock with a HOLD rating in Jul 2026 and since our initiation, the stock has corrected by ~15%. Given the strong resilient performance and favourable tailwinds for the company, we have upgraded our rating from HOLD to ADD and roll forward to Sep 2028F with lower TP of Rs9,800, valuing the stock at 36x Sep 2028F EPS. Downside risk: Slower-than-expected spending on infrastructure.
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