Polycab India rallies 5%, at new high in a weak market on solid Q4 results

In Q4FY24, Polycab's revenue grew by 29 per cent year-on-year at Rs 5,592 crore on the back of strong volume growth in W&C business.

Polycab India's shares hit a fresh high of Rs 6,109.90 rallying 5 per cent on the BSE in Friday’s intra-day trade. This came after the company reported its highest ever yearly and quarterly revenue and profitability in the January-March quarter of fiscal year 2023-24 (Q4FY24). In comparison, the S&P BSE Sensex was up 0.09 per cent at 72,468 at 01:10 PM.

In past one month, the stock of the wires and cables (W&C) and fast moving electric goods (FMEG) company outperformed the market by surging 16 per cent, as compared to 3 per cent decline in the benchmark index. It has recovered 60 per cent from its low of Rs 3,812.35 hit on January 11, 2024.

 

In Q4FY24, Polycab’s revenue grew by 29 per cent year-on-year (YoY) at Rs 5,592 crore on the back of strong volume growth in W&C business. Profitability for the quarter crossed the threshold of Rs 500 crore for the first-time ever, as the company posted a profit after tax of Rs 553.5 crore in Q4 FY24, a growth of 29 per cent YoY.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin for the quarter improved by around 50 basis points (bps) sequentially to 13.6 per cent, on account of better operating leverage and lower advertising and promotion spends. The margin, however, was down 40 bps from 14.0 per cent in Q4FY23.

W&C business revenue for Q4FY24 grew by 22 per cent YoY, on the back of strong volume growth, supported by robust public and private capital expenditure, uptick in real estate and effective execution of various internal strategic initiatives.

FMEG business also registered a growth of 17 per cent YoY, as the company capitalised well on a seasonally strong demand quarter. The fans segment exhibited impressive growth, as the new range of BLDC and premium fans received an encouraging response from the market, Polycab said.

Polycab has maintained the leadership position in the organised W&C 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 spends. As the country experiences an infrastructure upcycle, Polycab remains committed to its role in nation-building, it said.

The key demand drivers includes the Government’s thrust on infrastructure, energy transition boosting demand for power transmission, real estate upcycle and high demand from sunrise industries (Data Centers, EV, Railways, Metro, etc.).

The Government’s focus on Make in India generating cables demand are from sunrise sectors like defence, renewables, electric vehicles (EVs) etc. Incremental investment in R&D, alongside the time required for obtaining approvals from pertinent authorities and the establishment of new facilities, serve as significant entry barriers, keeping competition low, the company said.