YES Securities

Polycab India (Buy)

Target: ₹1,118

CMP: ₹935.90

Polycab reported stronger than expected numbers led by healthy revival in domestic B2C segment and exports. C&W segment revenues declined 5 per cent y-o-y; the decline was lower-than-expected on account of double digit growth in housing wires and 47 per cent y-o-y growth in exports.

However, domestic B2B segment declined 30-40 per cent y-o-y due to slower execution in infrastructure projects. Excluding Dangote revenues (₹44 crore), exports jumped 400 per cent y-o-y led by increasing presence in export market. Recovery in revenues is also aided by the strong increase in copper prices. FMEG growth of 24.7 per cent y-o-y was quite higher than our expectations. Growth was led by improved pricing, superior product mix and strengthening of distribution network. EPC segment revenues remained weak as order inflow remained low and execution challenges persist. The company continues to witness demand recovery across major segments in October. The sturdy performance reported by the company in Q2 despite the challenges witnessed by the industry is quite encouraging. We believe the company would be able to gain market share in the FMEG segment as it keeps on investing into increasing reach, brand visibility and into new products.