PL First Cut – Polycab 2QFY24

PL First Cut – Polycab 2QFY24 – Praveen Sahay – Research Analyst, Prabhudas Lilladher Pvt Ltd

Polycab 2QFY24 Result First cut: Healthy performance continue

(CMP: Rs 5313| Mcap: Rs 797 | Rating – Accumulate)

➡️ Revenues grew by 26.6% YoY to Rs42.2bn (PLe: Rs 38.0bn, 10% above) vs 4% above cons. estimates. (Cons.: Rs 40.7bn)

➡️ Gross margins expanded by 100bps YoY to 27.1%. (PLe:26%, cons. est. 27.2%)

➡️ EBITDA grew by 42.4% YoY to Rs6.1bn (PLe: Rs5.2bn, 16.8% above) vs 8.5% above cons. estimates (Cons.: Rs 5.6bn). EBITDA margins expanded by 160bps YoY to 14.4% (PLe: 13.6% & Cons. est. 13.8%) through judicious price revisions and favourable business mix.

➡️ PBT grew by 55.1% YoY to Rs5.6bn (PLe: Rs4.8bn)

➡️ PAT grew by 58.5% YoY to Rs4.3bn (PLe: Rs3.6bn) vs 10.3% above cons. estimates.

➡️ Wires & Cables revenues grew by 28.9% YoY to Rs38bn (PLe: Rs33.9bn) on strong domestic volume growth of ~30% (Dom. W&C revenue up 35.5% YoY). International business which decline by 9.5% YoY contributed 10.3% to its total sales. The company expanded its global footprint to 76 countries. EBIT grew by 60.2% YoY to Rs5.5bn and margins expanded by 300bps YoY to 14.6%, led by better operating leverage and improvement in product-mix.

· Domestically, both distribution driven business and institutional business exhibited strong performance.

· Geographically, growth was broad based, with highest growth coming from North region.

· Cables growth continued to outperform wires growth.

➡️ FMEG revenues up by 8.1% YoY to Rs3.3bn (PLe: Rs 3.15bn). losses continue.

➡️ Others revenues grew by 91.8% YoY to Rs2.0bn. EBIT grew by 41.8% YoY to Rs 225mn and EBIT margin contracted by 390bps YoY to 11.2%.

➡️ Working capital days increased to 65days in 1HFY24 vs 44days in 1HFY23, mainly due to reduction in payable days from 66days to 42days.

The stock currently trades at 50x/43x/36x FY24/FY25/FY26 earnings.