The Levels

What Flipped the Switch

1. A comprehensive beat. Revenue came in 16% above the house's estimate, EBITDA 24% above and adjusted profit 29% above.

2. Consumer electricals turned profitable at scale. The fast-moving electrical goods (FMEG) arm, long the laggard of the portfolio, reported an EBIT margin of 10.1%, already above management's 8-10% target for FY30.

3. The price came back. The stock has corrected about 11% since the house's previous review. Its rating-history chart shows that the earlier HOLD carried a target of about Rs 10,200, so the new Rs 10,100 is marginally lower. The upgrade is valuation-driven: a lower multiple on higher earnings, from a cheaper starting price.

The Quarter on One Panel

The margin dip has two clear causes. Copper price pass-through inflated revenue faster than profit, diluting gross margin, and the year-ago EPC quarter included a one-off gain. Sequentially, EBITDA margin actually improved by about 50 bps from 13.8%. For the first half, revenue rose 46% to Rs 18,109 crore and adjusted profit 38% to Rs 1,762 crore.

Three Circuits, Three Speeds

Wires and cables: Domestic sales rose 50%, but volumes grew only in the mid-to-high single digits on a high base, so most of the growth came from copper-linked realisations. Wires outpaced cables, and channel sales outpaced institutional orders. Exports rose 17% to Rs 490 crore, about 5% of revenue. Segment EBIT margin eased 90 bps year on year to 14.2% but recovered about 90 bps from the June quarter.

EPC: Faster execution on BharatNet and the RDSS power-distribution programme lifted revenue, while margin fell to 7.2% from 18.1% against the one-off-inflated base. Management guides for high-single-digit margins on an order book of Rs 9,000-10,000 crore.

The FMEG Light Comes On

FMEG revenue more than doubled to Rs 993 crore, and segment EBIT rose to Rs 101 crore from about Rs 2 crore a year earlier. Solar inverters, which Polycab trades rather than manufactures, were the largest contributor; operating leverage and a richer premium mix lifted margins. Management has kept its 8-10% FY30 margin target unchanged even though the business is already above it.

Rewiring the Forecasts

Earlier estimates in grey brackets.

Upgrades are steepest for FY27 and fade by FY29, and the house now models EBITDA margin drifting down to 12.6% by FY29 from 13.9% in FY26. Earnings growth slows sharply to about 3% in FY28 after a 35% jump in FY27. FY26-29 compound growth is modelled at about 17% for revenue and 13% for profit.

Wiring the Target Price

The house rolls its valuation forward to September 2028 earnings and assigns 40x, trimmed for slower FY28 growth and competition in wires. The stock currently trades at about 32.5x those earnings. The target sits just below the 52-week high of Rs 10,126.

The balance sheet supports the case. Working-capital days compressed to about 11 on letter-of-credit-backed payables, the company remains net cash, and the house projects FY27 operating cash flow of about Rs 7,737 crore. Capex was Rs 290 crore in the quarter and Rs 610 crore in the first half.

Levels at a glance: Polycab India · BOB Capital Markets · BUY (upgraded from HOLD) · CMP Rs 8,207 · Target Rs 10,100 · Upside 23% · 52-week range Rs 6,663 – Rs 10,126 · Basis 40x Sep-28E EPS