Polycab India, a leading electrical wires and cables manufacturer, witnessed an impressive surge in its share price during July, marking its best monthly performance since its listing in April 2019. The stock has gained 32.17% in the current month so far, surpassing its previous best monthly performances recorded in October 2019, June 2021, and September 2021, where gains stood at 25%, 18%, and 15%, respectively.
The remarkable performance of the company's shares can be attributed to its robust financial performance in Q1FY24. The net profit for the quarter soared by 81% to ₹403 crore, compared to ₹223 crore in the corresponding period of the previous fiscal year. Revenues witnessed substantial growth, rising by 42% YoY to ₹3,889 crore, driven by strong volume growth in the wires & cables business and a drop in raw material costs.
Furthermore, Polycab's international business segment saw a significant increase of 88% YoY, accounting for 8.9% of the total consolidated revenue. The wires & cables segment, constituting 89% of the company's revenues in Q1 FY23, reported a growth of 46% YoY, generating ₹3,487 crore in revenues.
Since the Q1FY24 earnings announcement on July 18, Polycab's shares have witnessed a continuous uptrend, rallying from ₹3,914 to the current market price of ₹4,693.40, representing a stellar gain of 19.91%.
On a year-to-date basis, the stock has delivered a stellar return of 82.69% and showed impressive performance in the preceding years as well. In CY22, it gained 4.16%, while the year before that, it achieved a multi-bagger return of 138%.
The stock is currently trading nearly 772.5% higher than its IPO price of ₹538 apiece. Sharekhan, a leading domestic brokerage firm, expects that Polycab will continue its growth momentum and may achieve a new all-time high.
Sharekhan states that the commendable performance of Polycab in Q1 FY24 has cemented its position as a leader in the cables and Wires industry.
Moving ahead, a comprehensive product portfolio, growth and increasing share of the B2C business, continued demand momentum in the B2B segment, scaling up the FMEG business, and exports are key growth drivers, it added.
Sharekhan anticipates a19.5% revenue CAGR and 24% PAT CAGR over FY2023–FY2025E. Given the company's market leadership and expansion plans, the brokerage firm upgrades its target multiple and maintains a 'buy' rating with a revised price target of Rs. 4,970 based on FY25E EPS. This target price indicates a new life-time high for the stock.
27 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.