This fundamentally strong cable company, which is engaged in manufacturing cables and wires and allied products including uPVC conduits and glands went up 4% in opening trade after receiving an order worth Rs. 4,099 crore from the Bharat Sanchar Nigam Limited.
Price Movement
In Wednesday’s trading session, Polycab India Limited stock was up by 4 percent in opening trade after bagging an order from Bharat Sanchar Nigam Limited. The stock has delivered a return of around 32 percent in the past year and outperformed Nifty in the same period. The stock reiterated from the day’s high of Rs. 6,899.95 and was trading at Rs. 6,787.55 which is 2.34 percent from the previous closing price of Rs. 6,632.55 per share.
What happened
Polycab India received an order worth Rs. 4,099 crores from Bharat Sanchar Nigam Limited for Development which includes the creation, upgrade, and operation & maintenance of the Middle mile network of Bharat Net on Design build operate, and maintain model. It includes the states & union territories of Karnataka, Goa, and Puducherry.
The period of the contract is three years for construction and 10 years for Maintenance contracts. The Interest rate is 5.5 percent per annum of capex for 1st 5 years & the remaining 5 years the interest rate is around 6.5 percent per annum of capex.
Financial Performance
Their Q2FY25 results show revenue from operations increased by a 30.34 percent increase year on year, from Rs. 4,218 crores in Q2FY24 and a 17.02 percent increase from Rs. 4,698 crores in Q1FY25. Their net profit increased by 3.48 percent year on year, from Rs. 430 crores in Q2FY24 to Rs. 445 crores in Q2FY25. Quarterly, the profits were up 10.69 percent from Rs. 402 crore.
The return on equity in FY24 stood at 24.32 percent improved from 21.06 percent a year ago. The debt-to-equity ratio was 0.02 times which has slightly decreased from 0.03 times in FY23. However, the return on capital employed has stood at 32.23 percent which has improved from 28.06 percent in FY23.
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Revenue Segment
According to the company’s recently released quarterly report, they considered revenue from Wires and cables which contribute 82.76 percent, FMEG is around 6.97 percent, and the remaining 10.27 percent from others as of Q2FY25.
Shareholding Pattern
As of September 2024, the shareholding pattern includes promoters holding a major share of 63.06 percent stake in Polycab India, Foreign Institutional Investors (FII) holding around 13.49 percent, Domestic Institutional investors (DII) standing at 9.35 percent, and public holdings standing at 14.11 percent.
Capex and Guidance
They aim for growth through strategic initiatives like Project Leap, targeting Rs. 20,000 crores in revenue by FY26 while expanding its international presence across 93 countries. The order book as of September stood at around Rs. 4,800 crore for the Revamped Distribution Sector Scheme (RDSS). The capex increase would be around Rs. 1,100 crore for FY25, FY26 and FY27.
About the company
Polycab India is one of the leading manufacturers of cables, wires, and fast-moving electrical goods (FMEG). The company was established in 1964 and operates on a dual business model and generates around 35% of its revenue from direct consumer sales (B2C) and 65% from business-to-business (B2B) transactions.
They focus on innovation and quality and offer a diverse range of products including electric fans, LED lighting, and solar solutions.
Written by Santhosh S
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