Anand Rathi 's research report on Polycab, India
Faster traction in the high margin B2C segments (wires/FMEG) and exports, premiumisation and cost-saving measures led to Polycab’s strong Q2 performance. Controlled WC and a healthy net-cash position (~Rs6.3bn) were other positives. On the faster recovery, we now expect 8%/13% CAGRs in revenue/PAT over FY20-22 with a 14%+ EBITDA margin. Strategic moves (inventory reduction, channel financing, etc) will aid in long-term sustainable growth.
Thus, we are positive on Polycab and retain a Buy with a target of Rs1,228 (18x/22x FY22e P/Es for C&W/ FMEG), earlier Rs945. Profitable growth in FMEG will support a re-rating.
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