Hold Polycab India; target of Rs 4100: ICICI Securities

ICICI Securities research report on Polycab India

Polycab reported strong Q1FY24 with revenue and PAT growth of 42.1% and 80%, respectively YoY. Key drivers were (1) strong institutional demand due to revival in infrastructure, real estate and capex cycle, (2) 88% growth in exports and (3) distribution rejig. We model Polycab to maintain strong earnings CAGR of 24.3% over FY23-25E led by healthy demand from B2B sectors and correction in commodity prices. We also model FMEG segment to revive in H2FY24. Improving maturity of value-for-money brand ‘Etira’ and premium brand ‘Hohm’ are likely to be DCF accretive events.

Outlook

We raise FY24-FY25 earnings estimates by ~9% to factor in strong Q1FY24 and commodity price correction. We maintain HOLD with DCF-based revised TP of INR4,100 (implied P/E: 31.4x FY25E; Earlier TP: INR3,400).