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  • 20 Jan 2023
  • ICICIdirect Research

POLYCAB REPORTS STRONG OVERALL PERFORMANCE IN Q3FY23

POLYCAB - 6088 Change: 46.00 (0.76 %)

News: Polycab's consolidated revenue increased ~10.2% YoY to ~Rs 3715.2 crore led by 11.4% growth in revenues of wires & cables business to Rs 3341.8 crore, respectively. However, the FMEG segment revenue remained flat YoY and improved 12% sequentially to Rs 342 crore. The gross margin increased by ~309 bps YoY largely on account of softening raw material costs and subsiding high-cost inventory. As a result, EBITDA margin increased 284 bps YoY to 13.6% tracking topline growth and decline in freight and forwarding expenses. Finally, PAT came in at Rs 360.8 crore up ~14% YoY (three year CAGR of ~18%) led by expansion in EBITDA margin

Views: We believe the revenue growth in Q3FY23 was driven by wire & cable business. Strong growth in wires & cables segment was led by domestic distribution business as well as revival in exports. Revenue from exports grew 32% YoY and contributed ~6% to overall revenue in Q3FY23. Polycab's FMEG business revenue remained flat YoY due to subdued demand. Higher advertisement expenditure also affected the profitability of the FMEG business. The gross margin witnessed improvement on account of judicious price revisions and change in product mix, which helped drive overall expansion in EBITDA margin. While we maintain our positive stance on the stock, we await management commentary on future demand outlook and recovery in FMEG business

Impact: Positive