Polycab India - Q1FY22 First Cut - ICICI Direct

(CMP: Rs. 1992; MCap: Rs. 28598 crore)

Polycab Q1FY22 performance was impacted due to lockdown in the month of May'21 and delay in passing on of higher input cost.

Q1FY22 Earnings Summary

Polycab's consolidated revenue increased by ~92% YoY at ~Rs. 1880 crore largely on a favourable base of Q1FY21. However, sales recovery was at 96% if compared to pre covid-19 period of Q1FY20. Revenues of wires & cables and FMEG segments increased by ~97% and ~40% YoY to Rs. 1626 crore and Rs. 192 crore respectively

The gross margin declined by ~390 bps YoY and ~200bps QoQ mainly due to delay in passing on of higher input costs. While on YoY basis, EBITDA margin increased by ~150 bps to 7.3% (led by savings in other expenses), the margin is still lower as compared to its historical average range of 12-13%

PBT jumped by 2.5x to Rs. 100 crore, mainly tracking improved sales and margin on a YoY basis. However, PAT came in at Rs. ~75 crore down by ~35% YoY mainly due to one-time tax benefits in the base period

Q1FY22 performance was significantly impacted due to lockdowns owing to the second wave. The demand recovery in core business (i.e. cable and wire business) in the next few quarters would be largely dependent on pick up in government expenditure and the revival of construction activities post easing of the lockdowns. On the margin fronts, improved operating leverage and price hikes in the coming future may trigger meaningful margin recovery for Polycab. We await management commentary on future demand outlook and scope of price hikes to offset inflationary pressure. The detailed report will be released post concall.

Source : Equity Bulls

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