Polycab Shares Jump 4% Post Strong Q3 Performance

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Overview

Polycab India shares climbed over 4% Monday, reversing a six-day decline. The surge followed the release of strong December quarter results, revealing a 36% year-on-year profit increase and a 46% revenue jump. Jefferies highlighted robust volume growth in cables and wires, attributing it to market share gains and demand factors. However, margin pressure emerged as the company absorbed commodity price hikes. Analysts foresee significant profit growth ahead.

Robust Volume Growth Drives Performance

The wires and cables maker posted an impressive 40 percent year-on-year volume growth in its cables and wires segment for the December quarter, according to brokerage firm Jefferies. This expansion was fueled by strategic market share gains, a rebound in private capital expenditure, sustained housing demand, and effective inventory restocking across the distribution network.

Margin Pressure Amidst Pricing Strategy

Despite the strong volume performance, Polycab India's profit margins experienced a squeeze. The company opted not to fully pass on recent increases in commodity prices to its customers. This deliberate pricing strategy aimed to safeguard demand and maintain market momentum, even at the cost of short-term margin erosion.

Bright Outlook Fueled by FMEG Segment

Looking ahead, Jefferies projects a substantial compound annual growth rate of 25 percent in profit after tax for Polycab India over the fiscal years 2025 to 2028. This optimistic forecast is primarily driven by continued volume expansion and expected margin improvements within the fast-moving electrical goods (FMEG) segment. The firm's analysis suggests a solid trajectory for the company's earnings.

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