Strong quarter; market share improves further
FMEG turns profitable; likely to continue its upward trajectory
Valuation and view
POLYCAB has reported strong revenue growth across segments. EBITDA margin expansion was led by profits in the FMEG segment and improved margin in EPC business on the back of better execution. POLYCAB remains market leader in the C&W industry, benefitted from continuous capacity expansion and a strong margin trajectory. In FMEG, the company’s strategic initiatives for talent acquisition, product development and brand building help it achieve profits. Though the upward trajectory of this segment needs to be monitored in the coming quarters.
We estimate a CAGR of 16%/17%/16% in POLYCAB’s revenue/EBITDA/PAT over FY25-27E. We estimate the company’s OPM at 13.1%/13.6% in FY26/FY27 vs. 13.2% in FY25. Its cumulative OCF is expected to be INR45.1b over FY26-27, whereas cumulative capex is likely to stand at INR25.0b. Cumulative FCF generation over FY25-27 will be INR20.1b, which will further improve its liquidity position (estimate net cash to improve to INR33.0b vs. INR24.6b as of Mar’25). We reiterate our BUY rating on POLYCAB with a TP of INR7,250 (based on 40x FY27E EPS).
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