According to Sharekhan’s latest report, “Polycab India Limited’s (Polycab) Q4FY22 performance exceeded expectations on all fronts, led by healthy demand and price increases, particularly in the wire and cable (C&W) segment. revenue grew by ~35% yoy to Rs 3.97 billion rupees (compared to our 17% growth estimate) C&W revenue grew 39% yoy despite a relatively healthier base Cable growth was better than cables FMEG business posted moderate growth of 9% year-on-year due to weak demand for certain products EPC business grew 8% year-on-year However, operating profit growth was limited to 18% year-on-year to Rs 476 crore due to cost inflation pressures As a result, OPM decreased by 170 bps yoy to 12% (vs our estimate of 11.4%). down 20% yoy to Rs 325 crore (vs our estimate of Rs 272 cr).”
positive and positive keys
The brokerage has indicated key positives in its report: “Cables & Wires (C&W) segment revenues increased 39% year-on-year, OPM improved quarter-on-quarter thanks to price increases that allowed the company to pass through the quarter-on-quarter increase in Market share in the C&W segment improved ~200 bps over the year and is currently at 22-24%. Net working capital cycle was reduced from 65 days to 54 days at the end of Q4FY22.”
Commenting on the key negatives, the brokerage stated: “C&W profitability declined year-on-year due to commodity volatility and inflationary pressures. Institutional business in the C&W space was subdued compared to last quarter. FMEG reported moderate growth in revenue due to quiet demand on the switchgear and margins were hurt by cost inflation and lower revenue.”
Buy for a target price of Rs 3,000
According to the brokerage in its latest report, “Polycab is expected to benefit from government infrastructure investments, revival in housing demand and increased private capital spending. OPM is expected to improve on the impact of increases and operating leverage offset rising input costs Focus on increasing exports and expanding FMEG’s business with product launches would be other key growth drivers Overall, we believe the company is on a growth trajectory healthy, due to its leadership position and strong product portfolio in both the C&W and FMEG businesses and strong in-house manufacturing and distribution capabilities.”
The brokerage has said: “We retain a buy in Polycab India Limited (POLYCAB) with an unchanged PT of Rs 3,000, due to strong performance in the fourth quarter of FY22 and a healthy long-term growth outlook in the business of C&W and FMEG”. He added that “fluctuations in commodity prices and intense competition are key concerns.”
The stock has been selected from the Sharekhan brokerage report. Greynium Information Technologies, the author and the brokerage house are not responsible for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult certified experts before making any investment decisions.