Buy Polycab India; target of Rs 9110: Motilal Oswal

Motilal Oswal's research report on Polycab India

Polycab India (POLYCAB) posted yet another strong quarter with revenue growing ~18% YoY to INR64.8b (in line) in 2QFY26, driven by ~19%/14% growth in Cables and Wires (C&W)/FMEG segments. EBITDA (adjusted for one-off gain of INR300m in the EPC business) increased ~56% YoY to INR9.9b (~11% beat), and OPM expanded 3.8pp YoY to 15.3% (+1.5pp vs. estimates). Adjusted PAT grew ~50% YoY to INR6.6b (~10% beat). Management indicated that the C&W demand outlook remains strong in 2HFY26. It maintains a long-term margin guidance of ~11-13%, though the near-term margin could be higher. The expansion of the EHV plant is continuing as planned and will be commissioned by 4QCY26-end. Commercial production is expected from early 2027. In FMEG, the fans category witnessed only marginal growth due to prolonged monsoons and high channel inventory, while demand for lighting, switches, switchgears, and conduit solutions remained healthy. Solar products continued their strong momentum, driven by central and state incentive schemes.

Outlook

Which will further improve its liquidity position (estimate net cash to improve to INR48.3b in FY28E vs. INR24.3b as of Sep’25). We reiterbusate our BUY rating on POLYCAB with a TP of INR9,110 (based on 40x Dec’27E EPS).