 "Polycab, Polycab India")
Shares of Polycab India hit an all-time high of Rs 5,787.10 apiece, gaining 2.7 per cent on the BSE in Tuesday’s intra-day trade, surpassing its previous high of Rs 5,722.90 touched on December 14, 2023.
The stock of the cables and wires (C&W) and fast moving electrical goods (FMEG) company has recovered 52 per cent from its low of Rs 3,812.35 hit on January 11, 2024.
Between December 14, 2023 and January 11, 2024, the market price of Polycab India had tanked 33 per cent on tax evasion; however, the company refuted rumours. The income-tax (IT) department initiated a search operation between December 22-30, 2023 at some offices and plants of Polycab.
Polycab issued a press release to stock exchanges on January 10, 2024 denying the rumours circulating in the media relating to tax evasion and stating that there were no financial implications likely on Polycab. The company had said it remains focused on its mission to provide quality products and services to its customers while upholding the principles of corporate governance and ethical business practices.
Meanwhile, in the December quarter (Q3FY24), the company had witnessed strong growth in the C&W segment led by sustained demand in the domestic markets, favourable government measures, and improvement in private Capex. The management expects demand momentum to sustain, given higher infra spends by the government, increasing private Capex announcements, and higher contribution from exports.
However, the growth in the FMEG segment declined by 13 per cent Y-o-Y to Rs 296 crore in Q3FY24 due to weak consumer demand.
The Fans segment grew sequentially but declined Y-o-Y on account of the higher base of the previous year due to stock liquidation activities prior to the BEE transition. Meanwhile, Switches and switchgear segments witnessed robust Y-o-Y Growth during the quarter. The management expects healthy growth in the Fans division as it plans to introduce 28 stock keeping units (SKUs) in Q4FY24 catering to the summer season.
The management said the favourable momentum observed in the infrastructure, construction and power sector feeds into the demand momentum for C&W sector, which has direct linkage with the growth of these industries.
The C&W sector performance has been robust over the past several quarters and appears promising for the next many years to come. Management maintained its sustainable consolidated EBITDA margin guidance at 11-13 per cent over the medium term.
Polycab has maintained the leadership position in the organised C&W segment with a market share of 24 per cent in FY23 backed by a strong distribution network and a strong brand recall. The company continues to gain market share in W&C.
The management expects strong traction in domestic W&C, increasing contribution from exports and strong demand, led by government spending. However, the FMEG segment continues to be under pressure, analysts at Axis Securities had said in the result update.
