Anand Rathi's research report on Polycab, India
Polycab’s management sees the weaker-than-anticipated Q1 as a blip, and drivers of long-term growth intact. Rising infra spend, export opportunities and its expansion to adjacent categories would drive its B2B portfolio. A 25%+ revenue CAGR and margin expansion in FMEG would continue. It will elaborate next quarter on its vision of over Rs200bn revenue by FY26 (implied CAGR: 18%). We are optimistic on Polycab’s prospects and expect 24%/23% CAGRs in revenue/PAT over FY21-23 with the RoE nearing 20% and healthy FCF continuing.
Thus, we retain a Buy, with a target of Rs.2,197 (24x/28x FY23e P/Es for W&C/FMEG). Growth/margin recovery is key to support a re-rating.
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