Polycab India Ltd, a prominent cables and wires manufacturer, is set to reveal its December quarter results amid speculation about the impact of recent income tax raids on the company’s performance. Analysts anticipate a substantial year-on-year (YoY) profit surge ranging up to 25%, coupled with a revenue increase of 12-20%. Despite a recent decline in Polycab India’s stock, brokerage firms express varying opinions on the company’s outlook.
Anand Rathi predicts a 16.1% YoY rise in net profit to Rs 415.30 crore, with a corresponding 18.7% increase in sales to Rs 4,409 crore. The forecasted Ebitda margin for the quarter is expected to dip sequentially to 14.1%, down from 14.4% in September but showing a slight improvement from the 13.6% margin in the year-ago quarter.
BNP Paribas is more optimistic, projecting a 25% YoY increase in adjusted profit to Rs 447.20 crore and a sales uptick of 22% to Rs 4,539.20 crore. The firm attributes the positive outlook to sustained demand for cables and wires in both domestic and international markets. Despite potential pressure on margins in the fast-moving electrical goods (FMEG) segment, BNP Paribas remains optimistic, citing the impact of commodity hedging policies and increased contributions from exports.
Nirmal Bang foresees a 22.6% YoY surge in profit to Rs 438.50 crore, with sales potentially increasing by 20% to Rs 4,458 crore. Another brokerage, Phillip Capital, projects an 18.1% rise in profit and a 17.9% YoY increase in revenue. Phillip Capital highlights strong growth in the business-to-business (B2B) segment, exports, and specific regional markets as key factors contributing to Polycab India’s growth.
Phillip Capital acknowledges a potential impact on the last 10 days of quarter sales due to IT raids but emphasizes strong growth in wires and cables (W&C), particularly in B2B, exports, and South and East markets.
Axis Securities anticipates a 15.2% YoY profit increase at Rs 416 crore, driven by strong growth in the B2B segment and exports. The brokerage firm expects Polycab’s revenue to jump 16.5% YoY to Rs 4,330 crore, with Ebitda rising 19.5% to Rs 602 crore. The forecasted Ebitda margin is 13.9%.
Polycab India’s shares have experienced a recent decline, down by 21.80% in the last month. Despite this, the stock rose 2.32% to Rs 4,440.05 on Wednesday. Jefferies, in a recent update, maintained its target price of Rs 7,000 on Polycab India’s stock.
Prabhudas Lilladher presents a more conservative outlook, expecting a 12% YoY revenue growth for Polycab India, with Wires & Cables sales growing by 11.1%. The firm attributes this lower growth projection to disruptions in business during the last 10 days of the quarter and a slowdown in the wire business. Prabhudas Lilladher anticipates a 4% YoY growth in the fast-moving electrical goods (FMEG) segment and expects margins to contract by 20 basis points due to a seasonally weak quarter for the fan segment.
In summary, while there is a consensus among analysts on the potential YoY profit surge for Polycab India in the December quarter, opinions vary regarding the extent of the impact of income tax raids on sales and margins. Factors such as sustained demand, commodity hedging policies, and regional market performance are cited as potential drivers for the company’s overall growth. Investors will keenly await the official release of Polycab India’s Q3 results to gauge the actual impact and assess the company’s performance against these projections.