BUY Polycab India, Sharekhan given a target of Rs 5510 for the stock.

Sharekhan bullish about Polycab India, issuing a buy rating on the stock with a target price of Rs 5510 in its research report dated January 19, 2024.

POLYCAB INDIA Sharekhan report targeting Rs 5510

Sharekhan’s analysis of Polycab India

In Q3, the Profit After Tax (PAT) exhibited a robust 15% year-on-year growth, amounting to Rs 413 crore, aligning with street estimates. This growth was primarily driven by a consistent expansion of over 20% in volume from the Cables & Wires (C&W) segment. However, a 44 basis points decline in margins year-on-year to 13.1% occurred, attributed to increased Advertising and Promotion (A&P) expenses for ODI CWC 2023 and a reduced revenue share from the international business. Anticipated is the continuation of strong volume growth in the C&W segment, supported by substantial government and private capex. The Fast-Moving Electrical Goods (FMEG) business demonstrated a moderate performance due to subdued consumer demand, with expectations for stabilization in the next four quarters.

OUTLOOK

The recent scrutiny of the company’s offices by the Income Tax authority has cast a shadow on the stock. Consequently, we are revising our target multiple to 34x, leading to a lowered target price (TP) of Rs. 5,510. Despite this adjustment, we maintain a buy rating on the stock.

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