This fundamentally strong cable company, which is engaged in manufacturing cables and wires and allied products including uPVC conduits and glands went up 1.5% in opening trade after receiving an order worth Rs. 1,549 crore from the Bharat Sanchar Nigam Limited.
Price Movement
In Thursday’s trading session, Polycab India Limited stock was up 1.6 percent in opening trade after bagging an order from Bharat Sanchar Nigam Limited. The stock has delivered a return of around 34 percent in the past year and outperformed Nifty in the same period. The stock reiterated from the day’s high of Rs. 6,998.95 and was trading at Rs. 6,919.50 which is 0.50 percent above the previous closing price of Rs. 6,885.30 per share.
What happened
Polycab India has secured a Rs. 1,549 crore contract from Bharat Sanchar Nigam Limited (BSNL) for the development, enhancement, and maintenance of the Middle Mile network under the Bharat Net initiative in Bihar. This project will follow a Design, Build, Operate, and Maintain (DBOM) model, with a construction timeline of three years and a maintenance period extending to ten years.
The financing terms include an interest rate of 5.5 percent per annum on capital expenditure for the first five years, and then increasing it to 6.5 percent for the subsequent five years.
Financial Performance
Polycab India Limited reported a robust financial performance for Q2 FY25, with revenue from operations improved by 30.34 percent year-on-year to Rs. 5,498.4 crores, up from Rs. 4,217.7 crores in Q2 FY24, and a 17.02 percent increase from Rs. 4,698 crores in Q1 FY25.
The net profit rose by 3.48 percent year-on-year, reaching Rs. 445 crore compared to Rs. 430 crore in the same quarter last year, marking a quarterly increase of 10.69 percent from Rs. 402 crore. The company’s return on equity improved to 24.32 percent from 21.06 percent in FY23, while the debt-to-equity ratio decreased slightly to 0.02 times. Additionally, the return on capital employed rose to 32.23 percent, up from 28.06 percent from the previous year.
Revenue Segment
In its latest quarterly report, the company revealed that revenue from wires and cables accounted for 82.76 percent, while fast-moving electrical goods (FMEG) contributed around 6.97 percent, with the remaining 10.27 percent coming from other sources as of Q2 FY25.
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Guidance and Capex
The company aims to achieve significant growth through strategic initiatives such as Project Leap, targeting Rs. 20,000 crores in revenue by FY26 while expanding its international footprint across 93 countries. As of September, the order book for the Revamped Distribution Sector Scheme (RDSS) was around Rs. 4,800 crores. Additionally, capital expenditure is expected to increase by around Rs. 1,100 crores for FY25, FY26, and FY27.
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.
About the company
Polycab India, established in 1964, is a prominent manufacturer of cables, wires, and fast-moving electrical goods (FMEG). The company operates on a dual business model, generating approximately 35% of its revenue from direct consumer sales (B2C) and 65% from business-to-business (B2B) transactions.
Committed to innovation and quality, Polycab offers a wide range of products, including electric fans, LED lighting, and solar solutions.
Written by Santhosh S
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