Polycab India Pvt Continues Strong Growth Trajectory

Polycab India Pvt Continues Strong Growth Trajectory

VoM News Desk | October 20, 2023 | 11:53 AM IST | Breaking News | Follow on Google News

Polycab India Pvt Continues Strong Growth Trajectory

Polycab India Pvt Continues Strong Growth Trajectory

Polycab India Pvt is on a remarkable growth trajectory, as its recent Q2 performance showcased. Revenues from operations reached ₹4,217.6 crore, marking a substantial 27% year-on-year (YoY) increase and an impressive 11% sequential growth. The company is now closing in on its ambitious goal of achieving ₹20,000 Crore in annual revenues by FY26.

Analysts Predict Even Earlier Success

Estimates from industry analysts suggest that Polycab may even achieve its revenue target well ahead of schedule. Jefferies India Pvt Ltd, for instance, estimates that by FY25, Polycab’s revenues could reach ₹20,537.3 Crore.

Project Leap Fuels Growth

One of the driving forces behind this success is Polycab’s multi-year transformational program, known as “Project Leap.” This initiative aims to establish the foundational elements required to meet the company’s ambitious growth objectives by FY26. The integration of HDC (heavy-duty cables) and LDC (light-duty cables) verticals has proven to be a significant step forward, providing both distributors and consumers with a broader range of products. Other growth factors include logo changes, brand positioning, and strategic partnerships with organizations like ICC.

In the fast-moving Electrical goods (FMEG) sector, Polycab’s Luminaires business had a strong quarter, benefiting from the establishment of a dedicated vertical under Project Leap. Various other initiatives, such as aligning wires and switches businesses under the same vertical, have also contributed to growth. Nevertheless, demand in this segment remains somewhat subdued due to high competitive intensity in the lighting sector and limited growth in appliances. However, the company’s strong performance in the cables and wires business, its largest vertical, remains a positive driver.

The growth in the Wires & Cables business for Q2 FY24 was particularly remarkable, with a 28% YoY increase, driven by strong volume growth. Factors contributing to this growth include opportunities stemming from the government’s “Make in India” initiative, increased government and private sector capex, and a rebound in private capex.

Polycab’s international business also made a notable contribution, representing 9.3% of the consolidated revenue during Q2. The company expanded its global footprint to 76 countries. However, potential geopolitical factors, such as the Israel-Hamas Conflict, need to be closely monitored.

As the industry traditionally experiences a stronger second half compared to the first half, Polycab is optimistic about its continued growth momentum at the consolidated level. Analysts at Jefferies India Private Ltd have raised their FY24-26 earning per share estimates, expecting sales and net profits to grow at a compound annual growth rate of 19% and 28%, respectively, from FY23-26. This growth is anticipated to be driven by higher volumes, increased capex, infrastructure and housing demand, and improved traction in FMEG from FY25.

VoM News Desk

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