Polycab India Limited is a prominent manufacturer of wires, cables, and fast-moving electrical goods (FMEG) in India. Here’s a comprehensive analysis of its share price, incorporating both fundamental and technical perspectives:
1. Current Share Price:
- As of February 27, 2025, Polycab India’s share price stands at ₹5,805.75.
2. 52-Week Range:
- The stock has experienced fluctuations between ₹4,236.00 and ₹7,605.00 over the past year.
3. Fundamental Analysis:
- Revenue and Profit Growth:
- In FY2024, the company reported a revenue of ₹180,394 million, marking a 28% year-over-year growth.
- Net Profit After Tax (PAT) for the same period was ₹18,029 million, reflecting a 41% increase YoY.
- Segment Contribution:
- The wires and cables segment remains the primary revenue driver, contributing approximately 88% to total sales.
- The FMEG segment accounts for about 7% of sales, with the remaining 5% derived from other segments, including the EPC business.
- Market Share and Position:
- Polycab holds a significant market share of over 24% in the organized wires and cables sector in India.
- The company’s extensive distribution network includes 3,464 authorized dealers and distributors, reaching over 100,000 retail outlets nationwide.
- Financial Health:
- The company maintains a robust financial position, being nearly debt-free.
- It has achieved a profit growth of 28.1% CAGR over the last five years.
- The dividend payout ratio stands at a healthy 24.0%.
- Valuation Metrics:
- The intrinsic value of Polycab’s stock is estimated at ₹4,622.14, suggesting the stock is overvalued by approximately 22% compared to its current market price.
4. Technical Analysis:
- Moving Averages:
- The stock’s current price is above its 50-day and 200-day moving averages, indicating a potential upward trend.
- Relative Strength Index (RSI):
- The RSI is currently at 60, suggesting the stock is neither overbought nor oversold, but leaning towards the overbought territory.
- Moving Average Convergence Divergence (MACD):
- The MACD line is above the signal line, which is typically a bullish indicator.
- Support and Resistance Levels:
- Immediate support is observed at ₹5,500, while resistance is around ₹6,200.
5. Recent Performance and Developments:
- Quarterly Results:
- In Q2 FY2025, Polycab reported a net profit increase of 3.4% to ₹4.40 billion, which was below analyst expectations of ₹4.53 billion.
- Revenue from operations rose by 30.4% to ₹54.98 billion, surpassing the anticipated ₹49.56 billion.
- Total expenses grew by 35% to ₹49.84 billion, impacting profitability.
- Market Dynamics:
- The high-margin retail business faced challenges due to increased competition, affecting the bottom line.
- The cables and wires segment benefited from government infrastructure investments and rising real estate demand.
- Management Changes:
- On January 22, 2025, the Board appointed Vijay Pandey as an Additional Whole-Time Director and Sumit Malhotra as an Additional Independent Director, both for a three-year term.
6. Analyst Ratings:
- Jefferies:
- Maintains a ‘buy’ rating with a price target of ₹7,700.
- Morgan Stanley:
- Rates the stock as ‘overweight’ with a target of ₹7,400.
Conclusion:
Polycab India Limited demonstrates strong fundamentals with significant market share and consistent revenue growth. However, recent quarterly results indicate challenges in the high-margin retail segment due to rising competition and increased expenses. Technical indicators suggest a cautiously optimistic outlook, but potential investors should consider both the overvaluation indicated by intrinsic value assessments and the competitive pressures in the market.
