For Polycab India Ltd, FY25 is shaping up to be a landmark year. Consolidated revenue for the half year ended September (H1FY25) surged nearly 26% year-on-year to approximately ₹10,200 crore. With this, Polycab is on track to achieve its revenue target a full year ahead of schedule. Under its Project LEAP initiative, the company had aimed to reach ₹20,000 crore in revenue by FY26. Polycab is now working on its next five-year goals, expected to be unveiled soon.
“There were some apprehensions that Polycab’s revenue growth would slow down given the high base, but the company has delivered on growth thanks to strong demand,” said Harshit Kapadia, analyst at Elara Securities.
Unsurprisingly, Polycab’s shares are up over 40% since the beginning of this financial year. There is also optimism surrounding its ongoing capex plan that should aid future growth. Polycab’s capex for H1FY25 stood at ₹570 crore, in line with its annual guidance of approximately ₹1,100 crore for FY25 and FY26. The company is looking to enhance capacity in the wires and cables business to cater to the robust demand across sectors.
Wires and cables are Polycab’s mainstay, contributing as much as 82% of total segment gross revenues and 91% of Ebit in H1FY25. While revenue from this segment grew 18% year-on-year during the period, Ebit remained largely flat due to heightened competitive pressures and a reduced share of the higher-margin domestic distribution business.
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The outlook for H2FY25 is optimistic, buoyed by government spending, private sector investments, and steady real estate demand.
“Relatively stable copper prices should help volume growth in Q3FY25,” says Kapadia, adding, “Investors should watch out for developments on tariffs, which can have an adverse impact on exports, which form about 10% of Polycab’s wires and cables’ revenues.”
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Polycab’s fast-moving electrical goods (FMEG) business remains a weak link. Despite a 21.5% rise in revenues during H1FY25, the segment reported an Ebit loss of ₹28 crore. Profitability in this segment will be a critical area of focus moving forward.
Polycab’s shares trade at 45 times estimated FY26 earnings, according to Bloomberg data.
Motilal Oswal Financial Services expects the company to maintain its premium valuations. “Cumulative free cash flow generation over FY25-27 will be at ₹2,750 crore, which will further improve its liquidity position,” said a report by Motilal last month. Return on equity (RoE) and return on invested capital (RoIC) are projected to reach 20% and 27%, respectively, in FY27, up from an average of 16% and 17% over FY15-24.
