(Reuters) – Polycab India reported a smaller-than-expected third-quarter profit on Wednesday, as a slowdown in its high-margin wires business due to excess supply crimped margins.
The company’s shares slid as much as 6.4% in their biggest intraday decline since June 2024.
Polycab’s consolidated net profit increased about 11% to 4.58 billion rupees ($53 million) in the quarter, missing analysts’ average estimate of 4.80 billion rupees, according to LSEG data.
Polycab’s revenue from operations rose 20% to 52.26 billion rupees, but came in below analysts’ average estimate of 53.38 billion rupees.
Margins in its wires business declined by 50 basis points to 13.5%.
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KEY CONTEXT
Polycab has had to contend with heightened competitive intensity in its high-margin wires segment, where supply remains higher than demand, analysts have said. The volatile prices of copper and aluminium, which are key raw materials for cables and wires, have added to the company’s issues.
Its engineering, procurement and construction (EPC) business for power distribution is seeing higher growth, but is a low-margin category. Besides, Polycab’s advertising and hiring costs have also increased.
Earlier this months, larger peer Havells India reported a year-on-year drop in third-quarter profit due to higher labour and advertising expenses.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBIT Price/ Revenue Profit Mean # of Stock to Div
DA Sales growth growth rating analysts price yield
(%) (%) * target** (%)
Polycab India Ltd 44.53 30.81 4.00 19.16 23.39 Buy 26 0.90 0.44
Havells India Ltd 55.84 38.06 4.12 15.03 23.56 Buy 24 0.87 0.62
Finolex Cables Ltd 21.66 18.43 — 13.61 13.47 Strong 5 0.76 0.78
Buy
R R Kabel Ltd 34.27 22.70 — 17.95 43.29 Buy 9 0.70 0.39
* 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
OCTOBER TO DECEMBER STOCK PERFORMANCE
— All data from LSEG — $1 = 86.4625 rupees
(Reporting by Ananta Agarwal in Bengaluru; Editing by Savio D’Souza)
