Polycab Q3 results review, Nirmal Bang

Despite a high base, softening commodity prices and a burgeoning inflation, Polycab India Ltd. reported its highest-ever third quarter topline of Rs 37.2 billion for Q3 FY23, up 10.2% YoY (2%/5.5% above our/consensus estimates) on the back of healthy volume growth in wires and cables business.

Topline was above our/consensus estimates by 2%/5.5%. While the wires and cables segment’s revenue grew by 11.4% YoY to Rs 33.4 billion (87.7% of total sales), the fast moving electrical goods segment’s revenue was flat YoY at Rs 3.4 billion (9% of total sales).

Gross margin expanded by 310 bps YoY to 25.7%. Ebitda jumped by 39.6% YoY to Rs 5 billion. Ebitda margin expanded by 290 bps YoY to 13.6% (160 bps/190 bps above our/consensus estimate), led by strong growth in exports, better operating leverage and judicious price revisions.

Polycab plans to enter the high voltage/extra high voltage cables segment and will set up a state-of-the-art EHV facility for the same. The company has set a topline target of Rs 200 billion by FY26-end under project LEAP.

While outlook for the wires and cables segment remains strong, we expect FMEG segment sales to pick up in FY24 post distribution revamp. Bloomberg