Polycab India Ltd - Q3FY23 Result First Cut - YES Securities

Strong performance led by wires and cables

- Result summary - Revenue grew 10.2% yoy despite higher base and declining commodity prices led by healthy volume growth in wires and cables, gross margins expanded 309bps led by change in product mix and judicious price revision. EBITDA grew 39.3% yoy with EBITDA margin of 13.6%. EBITDA margin expanded by 284bps yoy on better gross margins. PAT grew 45.3% on higher EBITDA.

- Cables and wires: Wires and Cables revenue grew by 11.4% YoY. The outperformance was primarily on account of benefits realized through the merger of HDC and LDC verticals last year. Demand continues to remain strong. Exports revenue exports grew by 32% YoY. Overall, exports business contributed to 5.9% of consolidated revenue in Q3FY23 and 8.6% in 9MFY23.

- FMEG: FMEG business for Q3FY23 was almost flat YoY and grew 12% QoQ despite challenging business environment. Fans business saw good growth as distributors started restocking ahead of transition to the new BEE norms. Switchgear business witnessed healthy growth driven by our influencer incentive program. Pipes & Fittings and Switches businesses too posted decent growth

- Profitability de-grew largely on account of higher &P spends.

- Work on realignment of distribution channel, brand building, new product development, premiumization of offerings and influencer management program are progressing well. These initiatives will help drive revenue growth and margin expansion for the FMEG business

- Others: Others segment which comprises of EPC business grew 27% yoy with EBIT margin of 12.1%.

- Near-term outlook - Company's wires and cables segment continues to see strong traction, with improvement in B2B side of the business. We expect the company continue to post healthy growth in coming quarters

- Our view - The stock is currently trading at 29x FY24E P/E and 20x EV/EBITDA. We remain positive on the stock with BUY rating with TP of Rs3,341. Given the strength in the balance sheet, focus on B2C business and increasing efficiencies should lead to stock trading at higher multiple.

Shares of Polycab India Limited was last trading in BSE at Rs. 2760.60 as compared to the previous close of Rs. 2829.55. The total number of shares traded during the day was 32597 in over 5667 trades.

The stock hit an intraday high of Rs. 2843.00 and intraday low of 2753.05. The net turnover during the day was Rs. 90915951.00.

Source : Equity Bulls

Keywords

PolycabIndia INE455K01017 Q3FY23 Result FirstCut YESSecurities