Buy Polycab India Ltd For Target Rs.8,934 By Geojit Financial Services Ltd
Domestic momentum offsets export headwinds
Polycab India Ltd is one of the largest wire and cable companies in India, manufacturing electrical products for households and industries.
* In Q2FY27, consolidated revenue grew 52.8% YoY to Rs. 9,899cr, supported by strong execution across the wires and cables, FMEG (Fast Moving Electrical Goods) and EPC(Engineering, Procurement and Construction) segments.
* Revenue in the wires and cables segment increased 47.2% YoY to Rs. 8,377cr, driven by domestic growth of ~50%, strong channel execution, favourable commodity-linked realisations and healthy demand across government and private sector end-markets.
* EPC revenue rose 53.4% YoY to Rs. 617cr, aided by steady execution of projects and a healthy order pipeline, with BharatNet and RDSS (Revamped Distribution Sector Scheme) remaining important execution drivers.
* EBITDA increased 39.4% YoY to Rs. 1,422cr, while margin declined 140bps YoY to 14.4%, as higher raw material costs (+55.6% YoY) and other expenses (+28.4% YoY) outweighed operating leverage benefits.
* Reported PAT rose 42.9% YoY to Rs. 990cr, led by higher topline growth in Q2FY27
Outlook & Valuation
Polycab India benefits from healthy demand across infrastructure, residential construction, manufacturing and energy transition projects, supporting strong momentum across its core businesses. It is focused on market share gains, distribution expansion and operational excellence under Project Spring, while maintaining a positive outlook on exports, backed by a strong global order pipeline. FMEG sees robust traction, driven by product innovation, deeper market penetration and solar-led growth. In addition, the management highlighted emerging opportunities from data centres, AI infrastructure, transmission networks and renewable energy investments. The company continues to strengthen its domestic leadership through product portfolio expansion, premiumisation initiatives and enhanced channel reach, while growing its presence across international markets. Hence. we upgrade our rating to BUY on the stock, with a revised target price of Rs. 8,934, based on FY28E P/E of 34x.
Key Concall Highlights
* FMEG revenue increased 123.8% YoY to Rs. 993cr, while EBIT margin reached a record 10.1%, extending its strong growth momentum for the 11th quarter.
* Management retained its medium to long term EBITDA margin guidance of 11-13% in the wires and cables, while FMEG's reached a record 10.1%, exceeding its FY30 target range of 8-10%. However, no upward revision in guidance was announced.
* Management remains optimistic on H2FY27 demand, supported by sustained investments in infrastructure, residential construction, manufacturing expansion and energy-transition projects.
* Export revenue grew 17% YoY and 85% QoQ, with management highlighting a strong order pipeline from the US, Europe, Latin America and Middle East.
* The EHV cable plant is now expected to be commissioned in FY28, with management indicating that commercial contribution will follow commissioning
* Management stated that no pricing action has been taken in response to UltraTech's entry into the wires segment and does not expect any meaningful near-term competitive disruption
* Solar inverters remain one of the fastest-growing categories, benefitting from the PM Surya Ghar Yojana and rising rooftop solar installations across India.
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