₹4,325.15 apiece. This uptick was sparked by the company’s stronger than anticipated June quarter (Q1FY24) earnings, primarily propelled by its wires and cables business, which constituted 89% of its Q1 sales mix. Aided by augmented private capital expenditure and government measures, the firm saw a surge in domestic demand.
Additionally, Polycab’s international presence expanded to 72 countries. As such, the firm reported a 46% year-on-year (YoY) increase in Q1 revenue from its wires and cables segment. In a contrast, Polycab’s fast-moving electric goods (FMEG) division reported a modest 2% revenue rise, reflecting subdued demand.
However, the company’s overall consolidated Q1 revenue climbed more than 42% YoY to nearly Rs3,890 crore. Operating leverage, price revisions, and a favorable business blend resulted in a 274 basis-point improvement in Polycab’s Ebitda (earnings before interest, tax, depreciation and amortization) margin to 14%. Analysts at Jefferies India in a report on 18 July said, “With completion of distribution revamp in FY23 and softening commodities, we foresee (FMEG) profitability to improve in FY24.
Even so, we view wires & cables to drive sales & profit growth over near term." Going ahead, Polycab’s earnings are likely to be buttressed by infrastructure and construction sectors. “We model Polycab to maintain strong earnings compound annual growth rate of 24.3% over FY23-25E led by healthy demand from B2B sectors and correction in commodity prices," said analysts at ICICI Securities in a report on 19 July. The broking firm also models value-for-money brand ‘Etira’ and premium brand ‘Hohm’ to be value drivers with improving maturity of these brands.
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