Polycab is one of India’s leading manufacturers of cables and wires and allied products such as uPVC conduits and lugs and glands.Company manufactures and sell a diverse range of wires and cables and its key products in the wires and cables segment are power cables, control cables, instrumentation cables, solar cables, building wires, flexible cables, flexible/single multi core cables, communication cables and others including welding cables, submersible flat and round cables, rubber cables, overhead conductors, railway signaling cables, specialty cables and green wires.

In 2009 company diversified itself into the engineering, procurement, and construction ‘EPC’ business, which includes the design, engineering, supply, execution and commissioning of power distribution and rural electrification projects.In 2014 it further diversified itself into the FMEG segment which includes key FMEG products such as switches and switchgear and conduits & accessories. Company’s Telecom Division is engaged in manufacturing OFCs, FRP/ARP Rods, IGFR Yarns and a whole range of end-to-end passive networking solutions and providing EPC-services to transform people’s lives, in terms of digital infrastructure and accessibility.

Company has 25 manufacturing facilities, including two joint ventures with Techno and Trafigura, located across the states of Gujarat, Maharashtra and Uttarakhand and the union territory of Daman and Diu.Three of these 25 manufacturing facilities are for the production of FMEG, including a 50:50 joint venture with Techno, a Gujarat-based manufacturer of LED productsand anothermanufacturing facility in Halolwith 50:50 joint venture with Trafigura, a commodity trading companyfor the production of copper wire rods.

Currently company enjoys almost 24% of the total Market Share in India along with exports in more than 70 countries and capital expenditure of Rs. 4,584 Mnbacked by 4300+ Authorized Distributors and 205000 + Retailers. Company generated 9.8% of its total revenue from its international business.

Polycab is the largest Wires and Cables manufacturer in India with a with a strong suite of products catering a Wide Customer Base across Industries such as Power, Oil and Gas, Construction, IT Park, Infrastructure, Renewable, Non-Metal, Cement, Agriculture, Real Estate, Telecom, Railway, Data Centres, Automotives and Nuclear Energy. Company’s clientele from various industries is as follow:

Figure 1 -- Source: Company Presentation

During the year 2023, the Company launched ~40 new models of star-rated ceiling fans in the designer, celebration, and tech series; second series of MCB with 6kA for the domestic and international market; launched various new cables, such as telecom hybrid cables, lead sheath offshore cables, submarine medium voltage cables; launched a TV commercial for Green Wire during a sporting event, conducted product education drives, webinars, and meets for influencers, builders, and trade partners, launched its 3-in-1 LED portfolio, It installed switch manufacturing plant with an installed capacity of 12 million units.

Fundamentals (FY24):

Financial Results:

Company’s Net Saleswas at Rs 4,340.47 crore in December 2023 up 16.83%, Quarterly Net Profit was at Rs. 412.85 crore in December 2023 up 15.44%andEBITDA stands at Rs. 640.50 crore in December 2023 up 17.84%ascompared to September2022.Company’s EPShas increased to Rs. 27.50 in December 2023 from Rs. 23.89 in December 2022

Positive Indicators:

• Company reported highest ever Quarterly and 9M revenue in Q3Fy24 and its Revenue grew by 27% YoY in 9MFY24, 17% YoY in Q3FY24 and its Revenue from international business contributed 6.2% of the consolidated revenue for the quarter.
• For 9MFY24 company’s EBITDA margin improved by ~120 bps YoY to 13.9%. Improved gross margins via strategic pricing revisions aswell as change in product-mix contributed to margin improvement.
• Company has launched Green Wire A ecological initiative andan energyefficient and environment-friendly product that contributes to India’s‘Go Green’ mission.
• Company has reported 5 year CAGR of 15% in Revenue, 20% in EBITDA, 28%in PAT.
• Its Wires & Cables Revenue for 9MFY24 and Q3FY24 grew by 29% YoY and 18% YoY respectively, on the back of strong volumegrowth.

In last3 Years the stock gave a return of 262.97%as compared to the rise of Sensex and Nifty in the same period.

Polycab has a significant market share in India’s wire and cable industry and this demand is going to increase going ahead due to various factors such as increasing consumption in rural India, urbanization, nuclearization of families, Increase in per capita income and infrastructural development in Real estate, defence, power, railways, aviation, and pipeline. Emerging sectors such as Digital India, Renewable energy, Defence, Data Centres, Smart cities, IOT and EV has also witnessed a steep growth which is ultimately beneficial to Wire and Cable industry and creating a sweet spot for Polycab for future growth.Company has a very good clientele along with high end R&D and manufacturing facilities to cater the growing demand and changing trends of the industry and its targets to achieve Rs. 200 Bn sales by 2026.Considering company’s proven track record, leading market share in industry, growth of infrastructural and other industries in upcoming years in India, marquee clientele and company’s capabilities to cater the rise in demand, investors can invest in this company for Long term period.

 - HET ZAVERI

INFO@SMARTINVESTMENT.IN

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