Polycab Q4 Results Review: Analysts Raise Earnings Estimate, Target Price After Profit Beat

Polycab India Ltd.'s earnings estimates and price targets were raised by analysts for the current fiscal after its fourth-quarter profit beat analysts' estimates.

The company's net profit rose 32% year-on-year to Rs 428.42 crore for the quarter ended March, according to a stock exchange filing on May 12, beating the Bloomberg estimate of Rs 382.08 crore. Revenue from operations rose 9% to Rs 4,323.68 crore, compared to a Bloomberg estimate of Rs 4,329.76 crore.

"We forecast operating margin to improve from 13.1% in fiscal 2023 to 14% by fiscal 2025, led by better operating leverage and improvement in FMEG margins," said Jefferies in a May 15 note. It views Polycab as a beneficiary of infrastructure, capex, and the housing revival and raised FY24–26 earnings per share by 2–4%.

Nuvama Institutional Equities expects double-digit volume growth for the company in the next two to three years.

Polycab India Q4 Results (Consolidated YoY)

• Revenue from operations rose 9% to Rs 4,323.68 crore. (Bloomberg estimate: Rs 4,329.76 crore)

• Ebitda rose to Rs 609.54 crore from Rs 476.34 crore. (Bloomberg estimate: Rs 535.49 crore.)

• Ebitda margin stood at 14.1% versus 12%. (Bloomberg estimate: 13.09%)

• Net profit rose 32% to Rs 428.42 crore. (Bloomberg estimate: Rs 382.08 crore)

Shares of the company rose 1.09% to close at Rs 3,418 apiece, as compared with a 0.61% decline in the benchmark Nifty 50.

Of the 26 analysts tracking the company, 12 maintain a 'buy,' six recommend a 'hold,' and one suggests a 'sell,' while of the remaining seven analysts, four remain neutral between 'buy' and 'hold,' and three are neutral between 'hold' and 'sell', according to Cogencis.

Here's what analysts are saying:

• Maintains 'buy' and raises the target price to Rs 4,290 from Rs 3,630, implying an upside of 27%.

• Says Polycab is a key pick in small and midcaps.

• B2B demand is strong, led by private capex and government measures, driving more than 21% volume growth in cables and wires in fiscal 2023.

• Views Polycab as a beneficiary of infrastructure, capex, and housing revival

• Raises FY24–26 earnings per share by 2–4%.

• Expects fiscal 2023 and 2026 sales and profit after tax CAGRs of more than 15% and 22%, respectively, driven by higher volumes.

• Forecasts operating margins to improve from 13.1% in fiscal 2023 to 14% by fiscal 2025, led by better operating leverage and improvements in fast-moving electric goods margins.

• Marks subdued traction in fast-moving electric goods, the slowdown in capex and infrastructure, and excess copper volatility as key risks.

• Maintain 'buy' and raise the target price to Rs 4,000 from Rs 3,200.

• Strong fiscal 2023 and demand momentum have led to 11% and 14% earnings per share upgrades for fiscal 2024 and 2025, respectively.

• Polycab’s Q4FY23 earnings beat house and street expectations significantly, reaffirming strong growth, especially that which cables are witnessing.

• Says margin improvement despite higher cable growth (lower margins) is a critical achievement.

• Robust private capex should keep cables’ demand strong, and key players should benefit.

• Sees double-volume growth for the next two to three years.

• Says that focusing on faster growth and higher-margin international business will add to the growth delta.

• B2C push (wires + FMEG) should uplift margins.

• Fast-moving electric goods, currently with EBIT losses, to turn positive in fiscal 2025.

• Says current discretionary demand is weak, but the second half of fiscal 2024 may benefit from the low base of fiscal 2023, leading to better margins.

• Management guides for a Rs 200 billion topline by fiscal 2026 seem conservative; hence, the possibility of disappointment is very low.