Buy Polycab India; target of Rs 3000: Sharekhan

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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Sharekhan's research report on Polycab India

Polycab India Limited’s (POLYCAB)’s annual report reflects the management’s focus on growth through backward integration, a comprehensive product portfolio, strengthening brand positioning, wide distribution network and a robust management. Project Leap (a five -year roadmap) envisages Rs. 20,000 crore revenue by FY26 with 1.5x industry growth. It aims to regain EBITDA margin of 11-13% in W&C and achieve ~12% EBITDA margin in Fast moving electrical goods (FMEG) by FY26. The company sees healthy volume traction across categories and expects healthy topline in the near to medium term. OPM is expected to improve on account of operating leverage, premiumisation and calibrated pricing hikes.

Outlook

We retain a Buy rating on the stock with an unchanged PT of Rs 3,000 as the valuation (P/E of 23x FY24E) seems compelling given its strong brand equity, healthy net cash (~Rs. 1,100 crore) and aggressive growth plans.

More Info

At 15:30 hrs Polycab India was quoting at Rs 2,088.00, down Rs 50.20, or 2.35 percent.

It has touched an intraday high of Rs 2,148.80 and an intraday low of Rs 2,045.00.

It was trading with volumes of 23,340 shares, compared to its thirty day average of 13,812 shares, an increase of 68.98 percent.

In the previous trading session, the share closed up 0.12 percent or Rs 2.55 at Rs 2,138.20.

The share touched its 52-week high Rs 2,820.05 and 52-week low Rs 1,761.25 on 22 April, 2022 and 29 July, 2021, respectively.

Currently, it is trading 25.96 percent below its 52-week high and 18.55 percent above its 52-week low.

Market capitalisation stands at Rs 31,227.39 crore.For all recommendations report, click here

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