The growth drivers for for the cables and wires segment remains intact, said international brokerage Goldman Sachs. The recent correction seen offers investors an opportunity for fresh entry into the sector.
Over half the revenue for the C&W segment comes from the domestic end market, where fundamentals remain strong in power, infrastructure, and real estate construction. Further, exports provide an opportunity with global T&D spending continuing to be healthy.
Indian cables and wires companies gaining traction on a low base. The growth prospects, return profile, along with medium-term visibility, will support premium valuations, noted Goldman Sachs.
The brokerage maintained its 'buy' rating on Polycab India shares, with a target price of Rs 6,510, while remaining 'neutral' on KEI Industries, reiterating its price target of Rs 3,780 apiece.
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Polycab India reported a consolidated net profit of Rs 457.57 crore in the October-December quarter of the current financial year. This marks an increase of 11 percent from the Rs 412.85 crore net profit reported in the corresponding quarter of FY24.
Citi has reiterated a buy call on Polycab with a target price of Rs 8,600 per share. The company reported 20 percent year-on-year revenue growth, which fell short of estimates. However, the wires and cables segment outperformed with better-than-expected margins, driven by the normalization of pricing. A lower loss in the FMEG business and strong EBITDA growth, ahead of estimates, were key highlights.
Macquarie has given Polycab an outperform rating, setting a target price of Rs 7,928 per share. The brokerage highlighted a strategic outlook projecting a nearly 15 percent revenue CAGR between FY25 and FY30. While reported revenue was in line with expectations, the cable and wire segment's better-than-expected margin emerged as a key positive surprise.
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