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- 19 Jan 2023
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UPBEAT PERFORMANCE IN CABLES & WIRES SEGMENT POLYCAB LATEST QUARTERLY RESULT
POLYCAB - 7000 Change: 114.00 (1.66 %)Polycab India – Q3FY23 First Cut
(CMP: Rs 2829 MCap: Rs 42,366 crore)
Q3FY23 Earnings Summary
Polycab’s consolidated revenue increased by ~10.2% YoY to ~Rs 3715.2 crore led by 11.4% growth in the revenues of wires & cables business to Rs 3341.8 crore respectively. However, the FMEG segment revenue remained flat on a YoY basis and improved 12% sequentially to Rs 342 crore
On a three-year CAGR basis, the consolidated revenue increased by ~14%, supported by ~15.5% revenue CAGR in the wire & cable business. The FMEG business has grown at a similar rate of 16% in the same period
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 by 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
View: 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 the overall revenue in Q3FY23. Polycab's FMEG business revenue remained flat on a YoY basis due to subdued demand. Higher advertisement expenditure also affected the profitability of 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