Polycab India hits 52-week high on strong Q4 results; here's what analysts say

After losing momentum in early trade, shares of Polycab Lab Ltd surged as much as 1.7% to hit a 52-week high of ₹3,436.40 apiece on the BSE, a day after the company posted an increase in net profit by 31% to ₹425 crore in the March quarter against ₹322 crore in the same period last year.

The scrip closed at ₹3,412.40 crore, up 1% or 33.70 points on Tuesday. During the session, the company’s market capitalisation stood at ₹51,354.51 crore with 9,974 shares exchanging hands on the BSE against the two-week average of 0.15 lakh shares. At present, the share price of Polycab India is trading 68% higher than the 52-week low of ₹2,045, which the company hit on June 20, 2022.

Polycab India, which manufactures cables and wires, posted an increase in revenue from operations by 9% at ₹4,324 crore as against ₹3,970 crore in the same period last year. In FY23, the company’s PAT (profit after tax) stood at 1,282.25 crore, witnessing a growth of 51.7% YoY against ₹845.23 crore in the previous fiscal year. The revenue  during the year under review surged 15.6% to ₹14,107 crore as against ₹12,203.7 crore in the same period last year.

Following a strong Q4 results, brokerage firms have revised the target price of the Polycab India stock. Analysts at ICICI Securities revised the target price to ₹180 from previous ₹155, while maintaining a ‘BUY’ rating for the stock. “We have cut our EPS estimates by 4-5% over FY24E-FY25E as we remain conservative on domestic spreads. However, we have increased FY25E P/E multiple to 12x (from 10x) as we believe the market is becoming favourable,” the brokerage firm says in a note.

Analysts at BOBCAPS have maintained a 'BUY' rating for the cable manufacturing firm, with a target price of ₹3,900. "We remain optimistic about Polycab’s growth prospects considering the moats in its core W&C business, growth in FMEG and B2C expansion. We raise our FY24/FY25 EPS estimates by 15%/18% to build in the strong FY23 performance and bright outlook. On rolling valuations to Mar'25E, our TP rises to ₹3,900 (vs. ₹3,300), based on an unchanged 35x P/E – 50% premium to the 3Y mean," the equity firm says in a note.

However, analysts at ICICI Direct have revised the rating from 'BUY' to ‘HOLD’  with a target price of ₹3,780. The brokerage firm says the share price of Polycab India has grown by approximately 4.6x over the past three years (from approximately ₹730 in May 2020 to ~₹3,387 levels in May 2023). The brokerage firm models revenue, earnings CAGR of 14% to 12.4%, respectively, in FY23-25E. "Realignment of distribution channel, brand building, new product development, premiumisation of offerings and influencer management programme is likely to drive FMEG segment growth, going forward," the brokerage firm says in a note.

Meanwhile, foreign brokerage firm Jefferies has set a target price to ₹4,290 for Polycab India with a ‘BUY’ rating. Nuvama has revised the target price to ₹4,000 with a ‘BUY’ rating for Polycab India.

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