Buy Polycab India; target of Rs 7,400: Sharekhan

Sharekhan is bullish on Polycab India has recommended buy rating on the stock with a target price of Rs 7,400 in its research report dated July 19, 2024.

Broker Research

July 22, 2024 / 12:08 IST

BUY

Sharekhan's research report on Polycab India

Polycab reported a revenue of Rs. 4,698 crore, a growth of 20.8% y-o-y. Cables and wires (C &W) business had a steady growth of 10.3% y-o-y led by cables, FMEG grew 22.6% y-o-y and others business which mainly comprises EPC was up 240% y-o-y on the back of robust execution of EPC order book. Operating margin for the quarter of 12.4% was down 169bps due to adverse revenue mix. Operating profit of Rs. 583 crore was up 6.4% y-o-y and company reported a PAT of Rs. 396 crore (-0.8% y-o-y). Robust C&W volume growth is expected to continue, given the good capex outlook and a thriving real estate sector. EPC business is also on a strong growth trajectory. FMEG segment also did well in the quarter and with increase in scale it will turn around its losses.

Outlook

Polycab has successfully consolidated its leading position in the C&W industry by performing consistently. Going forward, a strong focus on government and private capex, a comprehensive product portfolio, scaling up of the FMEG business, and EPC are key growth drivers. We envisage a 19%/18% revenue/PAT CAGR over FY2024-FY2026E, with a good RoCE of 31%. Hence, we maintain a Buy rating on the stock with a PT of Rs 7400.

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