Brokerage firm Prabhudas Lilladher has updated its target price for Polycab India to Rs 11,083, citing robust second-quarter revenue growth. The company reported a 47% year-on-year increase in revenue, driven by strong demand in its wire and cable division and a sharp rise in consumer electrical goods. While growth remains strong, investors are tracking the delay in the Extra High Voltage (EHV) plant commissioning and ongoing legal developments.
Prabhudas Lilladher has adjusted its target price for Polycab India to Rs 11,083, rising from the previous estimate of Rs 10,786. This revision follows the company’s strong financial performance in the second quarter of the 2027 fiscal year, where it recorded a 47% year-on-year revenue increase.
The core Wires and Cables division emerged as a significant contributor, with domestic revenue growing by 50%. This was supported by consistent infrastructure spending and demand from both government and private projects. Even with the ongoing geopolitical tensions affecting global trade, the company’s export business managed to post 17% growth.
Segment Performance and Margins
The company’s Fast Moving Electrical Goods (FMEG) segment, which includes consumer products like fans, lights, and appliances, saw a sharp revenue increase of 124% to Rs 9.9 billion. This surge was attributed to the company's focus on premium, higher-value products and an expansion in its solar product portfolio. Improved operational efficiency and a better product mix helped the company achieve an operating profit margin (EBIT margin) of 14.2%, a 90 basis point improvement compared to the previous quarter. Management has indicated that they aim to keep these margins within the 11-13% range in the long run.
Operational Delays and Legal Monitoring
While the company continues to see strong demand, it faces a change in its project timeline. The commissioning of its new Extra High Voltage (EHV) plant has been pushed from December 2027 to the 2028 fiscal year. Investors typically monitor such delays, as they can slow down the expected increase in production capacity and revenue contribution from new projects.
In addition to operational updates, the company is managing legal proceedings. The National Company Law Appellate Tribunal (NCLAT) has granted an interim stay on corporate insolvency resolution proceedings initiated by a claim from Asier Metals. The company has stated it expects to resolve this issue without any significant negative impact on its financials, but investors remain watchful of the legal status until a final resolution is reached.
Looking ahead, analysts have increased their earnings forecasts for fiscal years 2028 and 2029. The long-term performance will depend on the company's ability to maintain its domestic demand momentum, successfully execute its capacity expansion plans after the delay, and navigate any potential legal or regulatory challenges.