Sharekhan's research report on Polycab India
Our meeting with Polycab India Limited (Polycab) reinstated our comfort on the company’s long-term growth strategy of deepening its distribution reach, backward integration and scaling up both the wires & cables (W&C) and fast-moving electric goods (FMEG) through new products. Near-term growth in W&C segment would moderate due to lower realizations. Long-term growth would be buoyant led by private and government backed infrastructure projects and emerging opportunities in data centers, telecom, electric vehicles (EVs) and exports. Demand is soft in FMEG segment due to weak consumer sentiments. Early winter and changes in BEE norms to impact demand for fans in the near term. However, easing inflationary pressures and wider reach would bear desired results in the medium to long-term.
Outlook
We retain a Buy on Polycab with an unchanged PT of Rs. 3,215 (based on September FY2024E EPS) backed by various growth catalysts coupled with healthy balance sheet, comfortable cash position and improving return ratios.
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