Emkay Global Financial's research report on Polycab India
Polycab reported PAT of Rs3.6bn – at 9%/20% ahead of Emkay/Consensus estimates on the back of 100-160bps higher margin. Cables & Wires (C&W) reported 11.4% YoY sales growth. Sequentially, C&W margin improved 200bps to 13.7% due to product mix and judicious price revisions. FMEG performance remained subdued, with flattish YoY sales and marginally-negative EBIT due to higher ad spends (overall ad spends at 4x of 2QFY23). Management indicated to C&W margin of 11-13% over the medium term.
Outlook
We maintain BUY on the stock, with new Dec-23 TP of Rs3,147/share (earlier, Jun-23 TP of Rs2,690) based on DCF methodology, implying 30x PER (unchanged). We raise our FY24E/FY25E EPS by 3-8%. We factor-in 13% sales CAGR over FY23E-FY25E, C&W margin of 12-12.5% and FMEG margin of 4%/6% in FY24E/FY25E.