Anand Rathi's research report on Polycab India
Revenue grew 21% y/y; margins hurt. Powered by 10% volume growth, Q1 revenue rose 21% y/y to Rs 46.9bn. Cable and wire revenue rose 12% y/y to Rs 39.4bn and FMEG revenue, 23% y/y, thanks to robust demand for fans during a seasonally strong quarter. The EBITDA margin was 12.4%, down 170bps y/y due to less contribution from the higher-margin international business and the domestic distribution business while lower margin EPC business inched up. Staff costs and other expenses rose respectively 14% and 21% y/y. Net income fell 1% y/y to Rs 3.9bn, led by lower other income and high interest cost.
Outlook
We model revenue/net income clocking 16/14% CAGRs over FY24-26, led by robust government and private capex, and an upswing in real estate. We tweak our FY25e EBITDA margins slightly to factor in Q1 figures. At the CMP, the stock trades at 48x/41x the FY25e/ FY26e EPS of Rs 132/Rs 155. We maintain our Buy, with an unchanged TP of Rs 7,750, 50x FY26e EPS of Rs 155.
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