Polycab Q3 Net Profit Surges 15.3% YoY to ₹416 Crore, Stock Decline

Polycab India, a leading wires and cables manufacturer, reported its financial performance for the October-December quarter of the fiscal year 2023-24. The company reported a 15.3% YoY increase in its consolidated net profit, reaching ₹416 crores compared to ₹361 crores in the same period last year. Revenue from operations marked a 17% YoY improvement, reaching ₹4340.4 crores in Q3 FY23-24 compared to ₹4217.7 a year ago. EBITDA grew 13% annually to ₹569.20 crore. Despite the positive EBITDA growth operating margin decreased by 44 basis points to 13.12% against 13.6% a year ago,

Segment wise Performance

Wires and Cables: This segment continued to be the primary contributor to profits, with a revenue increase of 16.8% to ₹3904 crore in Q3 FY23-24 compared to ₹3341.8 crore in the same period a year ago.

Fast Moving Electric Goods: FMEG segment witnessed a 13% reduction in revenue, totaling ₹296.2 crores compared to ₹342 crores in the year ago period.

Global Business: Overseas operations made up 6.2% of Q3 consolidated revenue. Polycab foresees continued robust performance in this segment for Q4 and the future.

Stock Performance

On Thursday Polycab India's shares closed at ₹4,440 per share on NSE. At the time of writing polycab stock is trading at ₹4380, down 1.26% from yesterday’s close. In the past five days stock increased 11.25%

The stock recovered after facing a decline of 28.23% between 4 January and 11 January. This decline was attributed to tax evasion allegations. However, the recent rally indicates a rebound, with management clarifying that the company has not received any written information regarding the allegations.

Goldman Sachs and Jefferies remain optimistic about Polycab India's prospects, maintaining 'buy' ratings. Goldman Sachs sets a target price of ₹5,750, anticipating a 33% upside, while Jefferies targets ₹7,000, suggesting a 62% potential gain. However, both emphasize the need for clarity on the current tax-related issues before making investment decisions.

Final Words

Polycab India's stock declined marginally by 0.72% today and faced a 21.50% drop over the past month. However, it showed a modest 2.22% increase in the last six months. The stock performed well over the past year, recording a 55.71% growth. Polycab India demonstrated long-term strength, surging by 584.38% over the past five years.