Polycab Q1 Result Review - Strong B2B Demand; Model Strong Growth Momentum In FY24-25: ICICI Securities

ICICI Securities Report

Polycab India Ltd. reported strong Q1 FY24 with revenue and profit after tax growth of 42.1% and 80%, respectively YoY. Key drivers were-

1. strong institutional demand due to revival in infrastructure, real estate and capex cycle,

2. 88% growth in exports and

3. distribution rejig.

We model Polycab to maintain strong earnings compound annual growth rate of 24.3% over FY23-25E led by healthy demand from business-to-business sectors and correction in commodity prices.

We also model fast moving electrical goods segment to revive in H2 FY24. Improving maturity of value-for-money brand ‘Etira’ and premium brand ‘Hohm’ are likely to be discounted cash flow accretive events.

We raise FY24-FY25 earnings estimates by ~9% to factor in strong Q1 FY24 and commodity price correction.

We maintain 'Hold' with DCF-based revised target price of Rs 4,100 (implied price/earning: 31.4 times FY25E; earlier target price: Rs 3,400).

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