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Polycab India – Accelerating transformation, Dolat Capital

In its Annual Report FY23, Polycab India Ltd. re-emphasised its growth strategy under Project Leap (five-year plan), the progress of which has been in line with management expectations. It also outlines its strategies in each of the four key work areas-

  1. Customer centricity,
  2. Go -to -market excellence,
  3. new product development , and
  4. setting up of organisation enablers, which will continue to boost overall performance going ahead.

We remain confident on Polycab due to its market leadership in wires and cable, robust financials, strong backward integration and clear growth strategy.

Financials – Profit and Loss Statement Analysis (consolidated)

  • Revenue stood at 141 billion, up by 16% YoY as against Rs 122 billion in FY22. Revenue from the cables and wires segment grew by 18% to Rs 128 billion in FY23 from Rs 108 billion in FY22 fueled by strong volume gains and robust demand environment. The FMEG segment raked in Rs 12.6 billion sales in FY23, flat YoY.
  • Gross profit margin improved by 310 bps YoY to 25.5% in FY23 mainly due to favorable business mix and judicious price revisions.
    Employee costs (3.3% of sales) increased 12% YoY to Rs 4568 million on account of yearly increments and new hiring. The compensation cost recognised for the ESOP schemes was Rs 108 million for FY23.
  • Other expenses stood at Rs 12.9 billin in FY23, up 21% YoY mainly due to 51% YoY increase in advertising, sales and promotion spends (to Rs 1.2 billion) and 28% increase in power and fuel cost. As a % of sales, other expenses increased 40 bps to 9.1%.
  • Ebitda increased 46.4% YoY to Rs 18.5 billion in FY23. Ebitda margin expanded 280 bps YoY to 13.1% in FY23 – was at the higher end of management guidance of 11-13%.
  • Other income increased 48% YoY to Rs 1.3 billion mainly due to increase in MF investment gains.

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