Polycab India hits new high ahead of Q3 results, rallies 58% in 3 months

Polycab India hit a new high of Rs 1,140, up 3 per cent on the BSE on Monday, ahead of its quarterly results for the October-December period (Q3FY20). The company is slated to report its numbers on Tuesday, January 21, 2020.

In the last three months, the stock of the fast-moving electric goods (FMEG) company has rallied 58 per cent after its net profit more-than-doubled to Rs 194 crore in the September quarter (Q2FY20) on the back of strong revenue growth. It had logged a profit of Rs 90 crore in the year-ago quarter. In comparison, the S&P BSE Sensex was up 6.5 per cent during the same period.

The company’s revenue during the September quarter grew 24 per cent year-on-year (YoY) to Rs 2,242 crore driven by strong growth across segments. The FMEG products of Polycab largely include switch-gears, fans, lightings and luminaires, and solar pumps.

For Q3FY20, analysts at YES Securities expect that increasing contribution from exports, optic fibre and FMEG products would drive revenue to log a growth of 14.9 per cent YoY. However, margins could be lower on a yearly basis, as it registered a sharp jump in margins during the previous year quarter,” the brokerage firm said in sector update.

“Healthy growth in both divisions and a better FMEG margin lead us to expect revenue/PAT CAGRs (17 per cent/29 per cent) over FY19-22. Strong FCF and RoE/ RoCE post-tax (23 per cent/20 per cent) are other positives,” analysts at Anand Rathi Share and Stock Brokers said in its report. The brokerage has initiated coverage of the stock with a ‘buy’ rating. The target price has been set at Rs 1,162 per share.

Additionally, foreign portfolio investors (FPIs) have increased their stake in Polycab for the third straight quarter post its listing. FPIs increased its stake by nearly 1 percentage points in Q3FY20. Their holding in the company rose to 4.64 per cent in the December quarter from 3.75 per cent in the September quarter. The same was rose from 3.33 per cent at the end of June quarter. They held 2.49 per cent stake as on April 16, 2019, the day of listing.

At 01:13 pm, Polycab India was trading 2 per cent higher at Rs 1,131 on the BSE. In comparison, the S&P BSE Sensex was down 0.80 per cent or 334 points at 41,611. A combined 209,309 equity shares have changed hands on the counter on the NSE and BSE so far.