According to Sharekhan’s latest report, “Polycab India Limited’s (Polycab) Q4FY22 performance exceeded expectations on all fronts, driven by healthy demand and price increases, particularly in the cable and wire segment ( C&W) Its revenue grew by around 35% YoY to Rs 3,970 crore (vs. our 17% growth estimate).C&W revenue grew by 39% YoY despite a relatively healthier basis Wire growth was better than cable FMEG business grew moderately 9% YoY due to weak demand for certain products EPC business grew 8% year-on-year Operating profit growth, however, was limited to 18% year-on-year to Rs 476,000,000 due to cost inflation pressures. year-over-year for a reach Rs 325 crore (vs our estimate of Rs 272cr).”
Main positives and positives
The brokerage in its report stated key positives: “Cables and Wires (C&W) segment revenue increased 39% YoY, OPM improved QoQ on price increases which allowed the company to pass on the quarterly increase in input costs.Market share in the C&W segment improved by approximately 200 basis points during the year and currently stands at 22- 24% Net working capital cycle decreased from 65 days to 54 days at the end of Q4FY22.
The brokerage, commenting on key negatives, said, “C&W’s profitability declined year-over-year due to commodity volatility and inflationary pressures. Institutional business in the C&W space were moderate compared to last quarter and margins were impacted by cost inflation and lower revenues.”
Buy for a target price of Rs 3,000
According to the brokerage in its latest report, “Polycab should benefit from public infrastructure investment, the revival of housing demand and the recovery of private investment spending. OPM should improve with the impact of price increases and operating leverage offset increased inflow Focus on increasing exports and ramping up FMEG’s business with product launches would be other key growth drivers Overall, we believe the company is on a healthy growth trajectory, due to its leadership position and strong product portfolio in both C&W and FMEG and strong distribution and marketing capabilities. in-house manufacturing.
The brokerage said: “We maintain a long position in Polycab India Limited (POLYCAB) with an unchanged PT of Rs. C&W and FMEG.” He added: “Running commodity prices and intense competition are the main concerns.”
The stock was selected in Sharekhan’s brokerage report. Greynium Information Technologies, the author, and the brokerage are not responsible for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.