Polycab India gains after Q2 PAT rises 14% YoY

Shares of the wire maker advanced 3.83% to Rs 917.25 after the company posted strong performance for the quarter ended on 30 September 2020.

Polycab India's consolidated net profit jumped 14% to Rs 221.6 crore on 6% decline in revenue to Rs 2,113.7 crore in Q2 FY21 over Q2 FY20.

The revenue surged 116.43% in Q2FY21 compared with Rs 976.60 in Q1FY21. Improving overall business environment with staggered unlocking led to better performance sequentially.

On the segmental front, wires and cables business declined 7% year-on-year (YoY) to Rs 1,740.8 crore in Q2FY21 from Rs 1,881.1 crore in Q2FY20. "The business saw improving momentum with resumption of economic activities. Business-to-consumer (B2C) wires and exports sustained the strong traction," the company said.

Fast Moving Electrical Goods (FMEG) business grew 25% YoY to Rs 244 crore in Q2FY21 from Rs 195.60 crore in Q2FY20. Polycab said that growth was resilient across most categories and regions. Profitability in Q2 improved sharply despite rising input costs on account of calibrated pricing actions, premiumisation and working capital interventions, it added.

Profit before tax (PBT) in Q2 September 2020 stood at Rs 288 crore, up by 25% from Rs 230.30 crore in Q2 September 2019.

As of 30 September 2020, net cash position increased to Rs 627.6 crore. Return on capital employed (ROCE) stood at 26.6% in Q2FY21.

Commenting on the performance, Inder T. Jaisinghani, chairman and managing director, Polycab India, said: "I'm delighted with our Q2 performance given the context of current challenging business environment. Overall demand trends are encouraging and many of our consumer facing businesses have started seeing growth compared to last year. At the same time, we have tightened our belts to improve profitability without bargaining on long term brand development and innovation initiatives.

While we remain optimistic of robust economic potential over mid to long term, government initiatives and reviving consumer sentiment should support demand in months to come. We remain focussed on augmenting our brand positioning in the Electricals space and creating long term shareholder value."

Polycab India manufactures and sells various types of cables, wires, electric fans, LED lighting and luminaires, switches and switchgears, solar products, pumps and conduits and accessories. The company caters to various public and private institutions across a diverse set of industries, as well as retail customers through its B2C business.

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