Buy Polycab India; target of Rs 8233: Prabhudas Lilladher

Buy

Prabhudas Lilladher's research report on Polycab India

Polycab reported double-digit volume growth in its cables segment. Domestic W&C saw soft volume growth, which can be attributed to a slowdown in private capex and infra projects. Wires business reported single-digit growth mainly with high channel inventory and fluctuating copper prices. However, the company's international business (~8.3% of revenue) and FMEG business (+44.6% YoY) drove overall revenue growth. Furthermore, a reduction in FMEG losses due to operating leverage, along with the growth in international business and normalization of margins in the wires segment, contributed to ~70bps improvement in EBITDA margin. In W&C segment, Polycab expects wire growth to recover in Q4FY25, driven by the stabilization of copper prices, normalization of channel inventory, and a pick-up in infrastructure activity and private capex, which is expected to boost cable demand. Polycab aims to achieve 1.5xsector growth in volume and target EBITDA margin at 11-13% over the next 5 years through its Project Spring, aiming for Rs400-500bn revenue during this period.

Outlook

We expect revenue/EBITDA/PAT CAGR of 17.9%/17.3%/15.6% over FY24-27E. We maintain ‘BUY’ rating, with revised TP of Rs8,233 (Rs 8,741 earlier) valuing at SOTP, implying PE of 45x FY27E.

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Polycab India - 24012025 - prabhu