Polycab India Share Price Target at Rs 7,300: Sharekhan Research
Mirae Asset Sharekhan has reiterated its BUY rating on Polycab India Ltd, assigning a target price of Rs 7,300, signaling a strong upside from its current market value of Rs 5,886. The optimism is anchored in Polycab’s stellar Q4FY25 results, where revenue grew 25% YoY and PAT jumped 34.5%. The company has not only surpassed its Project Leap revenue goal a year in advance but has also achieved its first EBIT-level profitability in the FMEG segment. With robust traction across C&W, FMEG, and EPC verticals, Sharekhan foresees a revenue/PAT CAGR of 21%/23% between FY25–FY27, backed by a healthy RoCE of 33%.
Q4FY25: Robust Topline Growth and Margin Expansion
Polycab posted a strong Q4FY25, reporting net sales of Rs 6,986 crore, a YoY increase of 24.9%, with growth across all business segments. Operating profit rose 34.6% YoY to Rs 1,025 crore, buoyed by a 106 bps improvement in operating margin, now at 14.7%.
Net profit came in at Rs 734 crore, up 34.5% YoY, while Adjusted EPS stood at Rs 48.9. This strong performance was driven by volume expansion (15–17%), better realizations, and improved cost efficiencies.
Segment Performance: C&W, FMEG, and EPC Shine
| Segment | Revenue (Rs cr) | YoY Growth | PBIT Margin (%) |
|---|---|---|---|
| Wires & Cables | 6,019 | 23.7% | 15.1% |
| FMEG | 476 | 32.9% | 0.0% (Breakeven) |
| Others (incl. EPC) | 603 | 20.0% | 9.4% |
The C&W segment drove the bulk of growth, with domestic demand increasing 27% YoY. Exports dipped 24% due to the rollover of a large order, but are expected to rebound in FY26.
The FMEG division hit breakeven for the first time, with standout growth in fans, solar products (up 2.5x), switchgear, and LED lighting, backed by real estate sector demand.
The Others segment, primarily EPC, surged 47% YoY due to the timely execution of RDSS and BharatNet orders. The order book stands at Rs 7,000 crore.
Operational Efficiency and Margin Tailwinds
Polycab’s EBITDA margin improved to 14.7% from 13.6% YoY, with significant gains in the C&W segment. FMEG EBIT margins moved from -12.8% in Q4FY24 to breakeven, highlighting successful strategic investments over the last ten quarters.
Gross margin stood at 25.5%, reflecting a steady product mix shift and procurement efficiency.
Financial Outlook: Surpassing Growth Milestones Ahead of Schedule
Polycab surpassed its Project Leap FY26 target of Rs 20,000 crore in revenue a full year early, posting Rs 22,408 crore in FY25. This positions it as India’s largest electrical company by revenue.
Projections remain strong with FY27E revenue forecast at Rs 32,527 crore, supported by 15–20% industry outperformance through its SPRING strategy.
| Metric | FY25 | FY26E | FY27E |
|---|---|---|---|
| Revenue (Rs cr) | 22,408 | 27,230 | 32,527 |
| Adj. PAT (Rs cr) | 2,045 | 2,654 | 3,307 |
| EPS (Rs) | 136.7 | 177.3 | 220.9 |
| RoCE (%) | 31.5 | 33.0 | 33.1 |
| P/E (x) | 43.1 | 33.2 | 26.6 |
Capex Strategy and Asset Efficiency
Polycab plans a capex outlay of Rs 6,000–8,000 crore over the next five years, targeting an asset turnover of 4–5x. Investments will focus on capacity expansion, automation, and digitization across its 28 manufacturing units.
This capital deployment is aimed at enhancing B2B and B2C product portfolios while driving export sales to 10% of the overall mix.
Strategic Projects and Export Rebound
The SPRING initiative, Polycab’s next transformation roadmap, is aimed at growing 1.5–2x the industry rate, leveraging sectoral tailwinds in infrastructure and real estate.
While exports dipped in Q4FY25, the management expects a strong FY26 bounce-back as the deferred order gets executed. The export contribution currently stands at 6% of total revenue.
Industry Landscape: Macro Tailwinds Fuel Growth
India’s cables and wires industry, contributing nearly 45% of the electrical equipment market, is expected to grow to Rs 95,000 crore by FY26. Key demand drivers include:
- Power and infrastructure spending
- Railway electrification
- Urban housing growth
- Renewables and electric mobility
For FMEG, product innovation and evolving consumer preferences—modular switches, energy-efficient appliances—continue to propel growth.
Management Commentary: Execution and Market Share
Polycab’s market share rose to 26–27% in FY25 from 25% in FY24, and a significant leap from 19% in FY19. Management noted continued strength in both channel and institutional business.
Key growth levers include deeper penetration, premiumization in FMEG, improved EPC execution, and digital-first strategies.
Valuation and Recommendation
Mirae Asset Sharekhan values the stock at a target of Rs 7,300, based on strong earnings visibility, structural tailwinds, and margin stability. The valuation implies a forward P/E of ~33.2x FY26 earnings.
Key Risks:
- Volatility in copper and aluminum prices
- Rising competition in both C&W and FMEG
- FMEG breakeven needs consistency to be sustainable
A Structural Long-Term Growth Story Based on Higher Consumption Across India
Polycab continues to execute efficiently across all verticals, outpacing industry benchmarks and capitalizing on infrastructure-driven demand. With an unmatched distribution network, solid capex discipline, and profitable growth across segments, the company is well-positioned for multi-year outperformance.
Recommendation: BUY
Target Price: Rs 7,300
Upside Potential: ~24%
