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HomeMarket NewsPolycab shares fall 4% after Q1; brokerages stay bullish with up to 25% upside
Of the 34 analysts who have coverage on Polycab, 23 have a "buy" rating, nine have a "hold" rating and two have a "sell" rating.
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Shares of Polycab India fell nearly 4% on Friday, July 17, despite the company reporting better-than-expected June-quarter earnings, as investors assessed the management's commentary on export headwinds and margin outlook.
On the post-earnings conference call, the management said its domestic wires and cables (W&C) business grew 43% year-on-year, while overall W&C revenue increased 38%, ahead of Street expectations of around 35%. The company said volume growth remained in the low-to-mid single digits on a high base, with wires outperforming cables.
Exports, however, declined 12% year-on-year due to geopolitical disruptions in the Middle East, reducing their contribution to sales to 3.3% from 5.2% a year ago.
Also read: Polycab Q1 Results: Revenue growth betters expectations, margin contraction lesser than feared
Management said the impact was temporary, adding that export momentum is picking up, with North America accounting for around 45-50% of first-quarter exports, followed by the Middle East and Europe.
Polycab reiterated its medium-term EBITDA margin guidance of 11-13% and said its fast-moving electrical goods (FMEG) business remains on track to achieve an 8-10% margin by FY30. It also expects execution of the BharatNet project to accelerate, with ₹800-1,000 crore of revenue likely to be recognised in FY27.
Brokerages on Polycab
Following the results, Jefferies reiterated its 'Buy' rating and raised its target price to ₹11,100 from ₹10,920, implying an upside of nearly 25% from current levels.
The brokerage raised its FY27 and FY28 earnings estimates by 2-3% and expects a 22% EPS CAGR over FY26-FY29, citing Polycab as a play on India's power and capital expenditure cycle.
HSBC also maintained a 'Buy' rating with a target price of ₹10,160, implying a potential upside of about 14%.
The brokerage said stronger realisations in the wires and cables business and robust FMEG performance resulted in an earnings beat of around 10%, while expecting demand, capacity expansion and FMEG scale-up to drive a 21% EPS CAGR over FY26-FY29. It identified copper and aluminium price volatility as the key risk.
Of the 34 analysts who have coverage on Polycab, 23 have a "buy" rating, nine have a "hold" rating and two have a "sell" rating.
The stock was trading 3.6% lower as of 11.12 am at ₹8,883.50. It has gained about 29% over the last year.
