(Reuters) – Rcreported a smaller-than-expected second-quarter profit on Thursday as competition hurt its high-margin retail business, with a rise in expenses pressuring the bottomline further.
The company said its consolidated net profit rose 3.4% to 4.40 billion rupees ($52.4 million) for the three months ended Sept. 30. Analysts, on average, had expected a profit of 4.53 billion rupees, according to LSEG data.
Revenue from operations rose 30.4% to 54.98 billion rupees, beating analysts’ estimate of 49.56 billion rupees.
However, the increase in total expenses outpaced revenue growth, jumping 35% to 49.84 billion rupees.
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KEY CONTEXT
Polycab India said that lower contribution from its high-margin retail business in a highly competitive market weighed on its bottomline.
This countered the overall steady demand in the company’s cables and wires segment, aided by government infrastructure investments and rising real estate demand.
The segment accounted for about 83% of its total revenue.
Larger peer Havells India missed second-quarter estimates on lower demand for its air conditioners and fans on back of the monsoon season and higher expenses.
PEER COMPARISON
Estimates Analysts’ sentiment
(next 12
months)
RIC PE EV/E Revenue growth Profit Mean # of Stock to Div yield (%)
BITD (%) growth rating* analysts price
A (%) target**
Polycab India 50.4 34.8 17.79 22.42 Buy 26 1.06 0.40
Ltd 0 6
Havells India 65.2 44.4 15.24 25.20 Hold 20 1.02 0.46
Ltd 6 6
Finolex Cables 26.4 22.9 14.59 13.80 Buy 5 0.83 0.61
Ltd 6 4
R R Kabel Ltd 43.2 29.0 18.55 32.69 Buy 9 0.85 0.34
6 0
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG IBES
— $1 = 84.0280 Indian rupees
($1 = 84.0280 Indian rupees)
(Reporting by Dimpal Gulwani and Ashna Teresa Britto; Editing by Janane Venkatraman)
