Stock Overview

Ticker	Polycab
Sector	Electrical Equipment
Market Cap	₹ 75,200 Cr
CMP (Current Market Price)	₹ 5,175
52-Week High/Low	₹ 7,607/ ₹ 4,555
P/E Ratio	40.9 x
Beta	1.0 (Moderate volatility)

About Polycab

Established in 1996, Polycab India has evolved into the largest manufacturer of wires and cables in India and has diversified into the FMEG segment, offering products like fans, lighting, switches, and appliances. The company’s extensive distribution network and focus on innovation have cemented its position in the electrical industry.

Polycab India Limited stands as a leading manufacturer in the wires and cables industry, with a growing presence in the fast-moving electrical goods (FMEG) sector. This report delves into the company’s Q3 FY25 performance, growth drivers, peer comparison, valuation insights, technical outlook, potential risks, and concludes with an investment recommendation.

Let’s do a deep dive into the company’s financial performance and understand if you should have this stock  in your portfolio.

Primary growth factors for Polycab

1. Well-diversified revenue sources: Polycab does not rely on any single category for its revenue. It generates 83% of revenue from the Wires and cables business, 8% from FMEG and 9% from Others.

2. Solid business growth across categories:  Polycab reported a healthy YoY growth across all its business segments.

1. Wires and Cables: 12%. Demand for cables remained healthy during the quarter. However, the downward trend in copper prices combined with a high channel inventory of wires at the beginning of the quarter led to a slowdown in wires business. Pick-up in government spending and project execution pace, continued momentum in real estate and trend in commodity price movement will be key factors for near-to-mid-term demand.
2. FMEG business registered a growth of 45% YoY during the quarter, albeit on a lower base. Robust execution of the strategic roadmap translating into continued revenue expansion.
3. Other segments largely comprise Polycab’s EPC business. Revenue for Q3 FY25 grew by 111% YoY, with 9M FY25 growth at 200%. Robust execution of the EPC order book led to strong growth during the quarter.

3. Robust distribution network: Polycab’s extensive distribution network across urban and rural areas ensures wide market reach and accessibility.

4. Focus on innovation and quality: Continuous investment in R&D has led to the introduction of innovative products, enhancing brand reputation and customer loyalty.

5. Government initiatives: Initiatives like ‘Make in India’ and increased infrastructure spending have boosted demand for electrical products, benefiting companies like Polycab.

Q3 FY25 Financial Performance

Metric	Q3 FY 25	YoY Growth	QoQ Growth
Revenue	5,226 cr	20%	-5%
EBITDA	720 cr	26%	14%
PAT	464 cr	11%	11%

• Polycab reported an impressive 20% growth in Revenue and an 11% increase in Profit in Q3 FY 25.
• The company reported slight pressure on costs which impacted their overall profitability. 
• Despite macroeconomic uncertainties, Polycab has delivered consistent revenue growth and healthy margins, reinforcing its operational efficiency.

Detailed competition analysis for Polycab

Company	Market Cap	Profit	P/E	RoCE
Polycab	₹ 75,200 Cr	464 cr	40.9x	31.3%
KEI Industries	₹ 29,100 Cr	164 cr	45.6x	27.2%
Finolex Cables	₹ 12,200 Cr	124 cr	22.6x	18.7%
RR Kabel	₹ 9,900 Cr	68 cr	38.2x	21.7%

• While Polycab trades at a premium valuation, it’s industry-leading margins and superior return ratios justify the higher multiple.

Company valuation insights: Polycab

As per Discounted Cash Flow analysis:

It estimates the intrinsic value of Polycab shares based on expected future cash flows:

• Intrinsic Value Estimate: ₹5,500 per share
• Upside Potential: 10%
• WACC: 12.1%
• Terminal Growth Rate: 4.5%

Considering its strong financial performance and growth prospects, Polycab India appears to be fairly valued with moderate upside potential.

Major risk factors affecting Polycab

1. Raw material price volatility: Fluctuations in copper and aluminium prices can impact margins, given their significance in manufacturing wires and cables.

2. Intense competition: The electrical industry is highly competitive, with both organized and unorganized players, which could pressure pricing and margins.

3. Economic slowdown: A slowdown in infrastructure and real estate sectors could dampen demand for electrical products, affecting sales.

Technical analysis of Polycab share

• Resistance: ₹5,020
• Support: ₹4,650
• Momentum: Bullish 
• RSI (Relative Strength Index): 60 (Neutral to Bullish)
• MACD (Moving Average Convergence Divergence): Positive crossover, indicating upward momentum
• 50-Day Moving Average: ₹4,550 (acting as near-term support)
• 200-Day Moving Average: ₹4,200 (long-term support)

The stock is in a steady uptrend, with technical indicators suggesting potential for further appreciation.

Polycab stock recommendation by Ketan Mittal

Current Stance: BUY with a 12-month target of ₹5,500.

Outlook: Positive, with moderate upside potential

Recommended Action: Hold or accumulate on dips

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Conclusion

Polycab India Limited demonstrates strong financial health, a diversified product portfolio, and a solid market position in the electrical industry. Its expansion into the FMEG segment and robust distribution network provide avenues for sustained growth. 

While there are risks associated with raw material volatility and competition, the company’s strategic initiatives and market dynamics offer a positive outlook.