Buy Polycab India; target of Rs 8091: Prabhudas Lilladher

Prabhudas Lilladher's research report on Polycab India

We are upgrading POLYCAB from ‘Accumulate’ to ‘BUY’ with strong Q1 and improvement in EBITDA margin. The Wires & Cables (W&C) segment reported volume growth of 25%, with cables outperforming wires. Domestic W&C business grew by 32% YoY, driven by strong momentum in both channel and institutional segments. POLYCAB holds 27% market share in domestic organized W&C industry. The company's international business grew by 24% YoY in Q1FY26 on a low base, but declined by 6% QoQ. Contribution of exports to total revenue stood at 5.2%, but it is expected to improve in the coming quarters. The company aims to increase export contribution to 10% in the next 5 years. Its FMEG segment delivered another quarter of positive EBIT led by premium fans, lights and switches. Solar products are now a major contributor to the FMEG portfolio. POLYCAB aims to achieve 1.5x sector growth in volume and EBITDA margin of 11-13% over the next 5 years through its Project Spring and 12-14% from BharatNet project.

Outlook

We expect revenue/EBITDA/PAT CAGR of 20.1%/23.8%/22.6% over FY25-27E. We assign SOTP-based target price of Rs8,091 (Rs 7,510 earlier), implying PE of 40x FY27E.

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