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Polycab India, best known for wires and cables and FMEG, is looking to invest ₹800 core as capex over a two yeasrs as it looks to ramp up production targeting export markets and increased demand from within the country.
The company has already set a turnover target of ₹20,000 crore by FY26; with nearly 50 per cent of it being contributed by the B2B vertical and the remaining coming from the retail and B2C segments.
According to Gandharv Tongia, CFO, Polycab India, the investments will be made from internal resources. The company already has a cash surplus of ₹1,600–1,700 crore.
A part of the capex will focus on backward integration, and annual maintenance of machinery. New capacity addition will happen at the company’s existing facility near Vadodara in Gujarat.
“So we will invest ₹400 crore every year for another one – two years and this will be to ramp up production targeting the export markets and also upping presencehere in India. We may also look at inorganic growth, that is acquisitions in the IOT and AI space for the FMEG space,” he told businessline.
Polycab reported a net profit of ₹268 crore for the July-September period, a jump of 37.3 percent YoY. The numbers were driven up by volume growth in its core cables and wires business. Revenue increased 10.8 per cent YoY to ₹3,332.3 crore in Q2FY23.
Revenue from the wires and cables unit saw an increase of 13 per cent to ₹2,925 crore. However, the company’s FMEG business contracted 12 percent to ₹303.2 crore on subdued demand environment.
Margin Expansion
According to Tongia, the company hopes to maintain EBIT margins in the 11–15 per cent range for its cables and wires business. Despite volatility in copper prices, one of the key raw materials, there is a significant lower pressure on margins. Polycab has also been able to pass on price hikes.
The raw material cost accounts for 75 per cent of the topline of the company.
“In Q2, the margin expansion was supported by strong growth in exports and judicious price revisions,” he said.
The FMEG business has EBIT margins in low single digits and it will improve with demand picking up and also future push towards premiumisation.
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