Whalesbook
Polycab India showcased impressive financial results for the half-year ending September FY26, with consolidated revenue rising 21% year-over-year. The second quarter (Q2FY26) was particularly strong, with consolidated EBITDA surging 62% to ₹1,021 crore, surpassing analyst expectations, while revenue grew 18% to ₹6,500 crore.
The company's primary segment, wires & cables (W&C), which contributes 87% of its revenue, saw an 21% increase. The EBIT margin for W&C expanded by 270 basis points to 15.1%, aided by a greater share of premium wires and robust demand across domestic and export markets.
Exports performed exceptionally well, growing 25% despite uncertainties in the US market, which constitutes 20% of total exports. Polycab effectively managed the impact of rising copper prices by passing them on, leveraging its significant market position (27% share in the organized sector) and facing reduced competitive intensity.
Future expansion includes a new facility for extra high voltage cables expected by early FY28.
The project-driven EPC segment, representing 6% of revenue, experienced a 19% decline due to a high comparative base. However, its unexecuted order backlog remains healthy at over ₹11,000 crore, with expectations of improved execution in the latter half of FY26.
The fast-moving electrical goods (FMEG) segment grew 14% but faces ongoing margin pressures due to intense competition. A recent price hike in fans helped achieve a marginal positive EBIT margin of 0.5% in Q2FY26, an improvement from -6.5% last year. Achieving the segment's target of 8-10% EBITDA margin by FY30 is considered challenging.
Polycab's stock has hit a new 52-week high, reflecting improved investor sentiment driven by growth momentum and receding competitive fears in W&C. ICICI Securities projects a 24% CAGR net profit growth over FY25-28 with RoCE above 20%. The company also received favorable relief from an income tax demand.
Impact: This news is highly positive for Polycab India, signaling strong operational performance and robust growth prospects, which could lead to sustained stock appreciation. The positive outlook from analysts and the company's strategic moves suggest a favorable environment for its stock. The news directly impacts the Indian stock market through investor sentiment and potential stock price movement of Polycab India and possibly related companies in the electrical goods and cables sector.
Rating: 9/10
Definitions:
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance, excluding non-operating expenses like interest and taxes, and non-cash expenses like depreciation and amortization.
EBIT (Earnings Before Interest and Taxes): A measure of a company's operating performance, excluding interest expenses and income taxes.
Basis Points (bps): A unit of measure used in finance to describe small percentage changes. One basis point is equal to 0.01% (1/100th of a percent).
CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a specified period, longer than one year.
RoCE (Return on Capital Employed): A profitability ratio that measures how efficiently a company is using its capital to generate profits.
EPC (Engineering, Procurement & Construction): A type of project delivery method where the EPC contractor is responsible for all activities from design to procurement and construction.
FMEG (Fast Moving Electrical Goods): Consumer electrical products that are used in daily life, such as fans, lighting, switches, etc.