Polycab India Ltd., incorporated in the year 1996, is a Mid Cap company (having a market cap of Rs 28518.55 Crore) operating in Consumer Durables sector.
Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 1905.81 Crore, down -37.82 % from last quarter Total Income of Rs 3064.79 Crore and up 88.65 % from last year same quarter Total Income of Rs 1010.22 Crore. Company reported net profit after tax of Rs 77.40 Crore in latest quarter.
Investment Rationale
Q1 performance is just a blip, and the medium-term growth story remains intact, with Polycab’s strong focus on gaining market share and growing ahead of the industry across product categories. Management stated the progress on larger projects is slow, while smaller projects are tracking well. But overall demand for the B2B segment is still below pre-Covid levels. Additionally, the real-estate recovery is on track and is seeing a slew of new launches after strong inventory absorption in H2FY21. New product launches, focus on premiumization and network expansion should aid FMEG revenue growth in the medium term. The brokerage remains constructive on Polycab, considering its consistent focus on strengthening balance sheet, as well as potential for margin improvement with the full benefits from ‘Project Udaan’ kicking in. The stock has rallied 49% in the last six months, and the brokerage believes it could take a breather till revenue and margin recovery resumes. Key risks: weak government spends on Infra, Power and other key sectors; delayed private capex recovery; market share loss; moderation in FMEG revenue growth; and continued commodity inflation.
Promoter/FII Holdings
Promoters held 68.4 per cent stake in the company as of June 30, 2021, while FIIs held 6.5 per cent, DIIs 8.7 per cent and public and others 16.4 per cent.
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