Polycab Stock To See 52% Upside As Strong Demand Expected In Q4: Morgan Stanley

Polycab India Ltd. expects to see strong demand in both domestic and export markets in the coming quarter, driven by government and private sector investments, as well as the imposition of US import tariffs on competitor countries. Keeping these points in mind, Morgan Stanley has maintained its 'overweight' rating with a target price of Rs 7,395 and an upside of 52%.

Additionally, low inventory levels, inflationary copper prices, and limited competition provide a solid foundation for continued success Morgan Stanley noted, after its non-deal roadshow with the cable and wire company in London.

While the brokerage sees stronger-than-expected volume growth in the industry and the ramp up in FMEG business as an upside, sluggish real estate cycle and slower than expected recovery in exports are a cause of concern, it added.

Polycab is seeing increased demand due to higher government capital expenditure starting December 2025, alongside a pickup in private and real estate capex. Low inventory levels are also leading to re-stocking by the distribution channel, further boosting demand. Additionally, inflationary trends in copper prices are expected to increase realisation in the fourth quarter, positively impacting Polycab’s top line, the brokerage said.

Polycab’s export business is thriving, with momentum continuing into the fourth quarter, similar to the third quarter. The company will benefit from cost competitiveness, especially as the US imposes import tariffs on products from China and Mexico. Polycab aims for exports to contribute over 10% of its revenue within five years, driven by its strong position in global markets.

Competition is expected to remain limited for the next four-five years, as UltraTech’s cable plant won’t ramp up until fiscal 2031. The long gestation period for cable businesses, including stringent product approvals and distribution network development, limits competitors' market entry. Polycab’s established relationships with electricians and its significant investment further strengthen its market position.

Polycab’s EBIT margins is expected to remain in the 12-14% range in the near term and 11-13% in the long run, Morgan Stanley said.