Polycab is the largest manufacturer of wire & cable in India. The share price has increased to Rs 5,683.90 per share, up Rs 2,096 or 59 percent in the last six months.
Polycab India Ltd belongs to the large-cap category with a market capitalization of Rs 85,048 crore. The company shares have gained a multibagger return of 120 percent on a year-to-date basis.
Polycab is India’s leading manufacturer of cables and wires and allied products such as uPVC conduits lugs and glands. It has a wide range of consumer electrical products like Fans, Switches, Switchgear, LED lights and Luminaries, Solar Inverters, and Pumps.
Polycab is the market leader in the wire & cable business with an organized market share of 22%-24%.
The stock reached an all-time high of Rs 5,710 on December 11th. Polycab shares were trading at Rs 5,664.20 per share on Wednesday, down 0.24 percent from the previous close price.
Some of the main factors behind polycab’s stock-price growth are:
● The company’s revenue growth has been significantly accelerated, with revenue increasing by 34% year on year in H1FY24 and 27% year on year in Q2FY24, owing to high volume growth in the wires and cables division.
● Wires and cables contributed 88 percent of gross sales in Q2 due to a robust demand rise. The government’s capital expenditures and robust real estate demand were the primary drivers of the company’s sales growth pace.
● In Q2FY24, the company’s margins increased by 300 basis points year on year, owing to improved operational leverage and product mix. Polycab also has a superior product mix than Havells, with a higher amount of its revenue coming from the cable sector than its competitors.
● In the September quarter, company revenue from international business contributed 9.3% of the consolidated revenue for the quarter. The Company expanded its global footprint to 76 countries.
● The company reported strong earnings and its revenue has increased by 27 percent year on year, from Rs 3,332 crore in Q2FY23 to Rs 4,217 crore in Q2FY24. During the same period, the company’s net profit increased by 59 percent from Rs 271 crore to Rs 421 crore.
● The company’s EBITDA margin increased by 220 basis points year on year to 14.3% in H1FY24. EBITDA margin increased by 160 basis points year on year to 14.4% in Q2FY24.
● The FMEG business grew by 8% year on year in Q2FY24, although Switchgears and Conduit Pipes & Fittings grew significantly, both year on year and quarter on quarter. Switch sales increased 2x year on year on a good foundation.
● Additionally, As per the CNBC-TV18 report, the company is planning to increase capacity by an additional 25% to 30% in the next two years.
As of the recent shareholding pattern, Foreign Institutional Investors’ stake climbed from 9.66 percent to 12.41 percent in the September quarter. The company promoter owns 65.91 percent of the firm.
Written by Omkar Chitnis
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