Record Revenue Comes With Shrinking Profit Margins

Polycab India has reported a record consolidated revenue of ₹8,860 crore for the fourth quarter of fiscal year 2026, a significant 26.9% increase from the previous year. This revenue growth, driven by strong performance in its core Cables and Wires (C&W) segment and sustained sales in Fast-Moving Electrical Goods (FMEG), shows strong market demand. However, profit margins faced significant pressure. Consolidated EBITDA grew at a slower pace, up 13.3% to ₹1,160 crore, while adjusted net profit rose modestly by 6.3% to ₹770 crore, showing that profit growth lagged behind revenue growth. Consolidated gross, EBITDA, and PAT margins fell by 205, 158, and 168 basis points year-on-year. This suggests Polycab is gaining market share but at a higher cost, or facing pressures that are eating into profits per sale.

Polycab’s share price closed up 0.94% at ₹8,415.50 on the NSE on May 6, 2026, near its 52-week high of ₹8,724.35. This shows investor confidence, even with the margin challenges.

How Different Business Segments Performed

The Cables and Wires (C&W) segment continued to drive revenue, growing approximately 29% year-on-year to ₹7,760 crore. However, its EBITDA margin dropped 2 percentage points to 13% due to overall margin pressures. The Fast-Moving Electrical Goods (FMEG) business surged, with revenue up nearly 39% to ₹660 crore. Encouragingly, FMEG's EBITDA margin grew 4 percentage points to about 4%, indicating better efficiency and product mix. The Engineering, Procurement, and Construction (EPC) segment saw revenue fall about 9% to ₹450 crore, with management citing project timing and a move away from low-margin work.

For the full fiscal year 2026, total revenue was ₹2,88,837.92 crore and PAT was ₹2,708.43 crore, up 29% and 32% year-on-year. Full-year EBITDA margins were 13.9%, meeting guidance.

Valuation Compared to Rivals

Polycab India trades at a trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio of about 47-48x. This valuation is similar to its key competitors. Havells India trades at a TTM P/E of 46-59x, and KEI Industries at 52-55x. Despite being India's largest wire and cable maker, Polycab doesn't trade at a significant premium. Its market cap is about ₹1.26 lakh crore. The market seems to expect continued growth, but the shrinking margins might require a closer look at whether these valuations are sustainable, given potential cost pressures and competition.

Concerns Over Growth Sustainability and Margins

While analysts are mostly bullish, some factors raise caution. Management's explanation for margin pressure—higher institutional sales and weaker exports due to Middle East disruptions—shows vulnerability to outside factors. The Middle East conflict has caused major supply chain and logistics issues for Indian exporters. Also, the shift to institutional sales boosts volume but typically means lower margins than retail.

A significant issue arose in January 2024, when allegations of around ₹1,000 crore in unaccounted cash sales and other financial irregularities surfaced after an Income Tax Department raid. While the company has since shown strong growth, such past allegations can raise questions about financial transparency and governance, potentially affecting investor sentiment and long-term value.

Polycab's ongoing capital spending, including ₹1,480 crore in FY26 and a five-year ₹6,000-8,000 crore 'Project Spring', aims to secure capacity. However, the success of these investments in driving profitable growth, especially if margin pressures continue, is yet to be proven.

Analyst Views and Sector Tailwinds

Despite margin worries, most analysts remain positive about Polycab's long-term outlook. Motilal Oswal and ICICI Securities have raised price targets, forecasting up to 16% upside. Motilal Oswal expects revenue and EBITDA to grow at a 19% CAGR from FY26-28, valuing the stock at 40 times FY28 earnings.

ICICI Securities believes Polycab will benefit from strong demand in data centers, defense, infrastructure, and real estate, noting its market share in organized C&W has reached 30-31%. They forecast revenue/PAT CAGR of 19.9%/20.6% from FY25-28.

The Indian cables and wires sector is set for significant growth, projected at 12-15% CAGR, fueled by government infrastructure spending, renewable energy goals, 5G rollout, and EV adoption. These positive economic factors support Polycab, but its success in turning volume growth into strong profits will be crucial for its current valuations.