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Target: Rs 2,771
CMP: Rs 2,490.90
Polycab In,dia reported Consolidated Revenues of ₹3,372 crore (up 23 per cent y-o-y), ahead of our estimates of ₹3,246 crore. Gross margins stood at 22.6 per cent, down 136 bps y-o-y (vs. estimates of 23.8 per cent), primarily due to higher raw material costs.
EBITDA came in at ₹362 crore vs. our estimates of ₹ 350 crore. EBITDA margins were posted at 10.7 per cent (in line with our estimates of 10.8 per cent), up 100 bps q-o-q owing to control over employee expenses and price hikes taken by the company to partially offset the increase in the RM cost.
Lower other income, higher interest, and higher depreciation resulted in PAT of ₹248 crore (Vs. ₹245 crore in Q3-FY21).
We believe Polycab is set to benefit from the recovery in the B2B segment and its growth will be supported by its expanding presence in domestic markets as well as higher exports going forward.
Furthermore, we expect strong growth in the B2C and FMEG segments driven by sustained demand recovery, new product launches, and product premiumization. We value Polycab at 27x FY24 EPS of ₹103 to arrive at a target price of ₹2,771/share (vs. ₹2,475 earlier), which gives an upside of 10 per cent from the CMP.
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