Motilal Oswal Upgrades Polycab India to Buy, Sets Price Target at Rs 9800
Polycab India Reports Strong 4QFY26 Earnings
Polycab India (POLYCAB) has released its research report for the fourth quarter of fiscal year 2026, showcasing a significant increase in revenue and earnings before interest, tax, depreciation, and amortization (EBITDA). The company's revenue grew approximately 27% year-over-year (YoY) to INR 88.6 billion, surpassing estimates by 5%. EBITDA also rose 13% YoY to INR 11.6 billion, exceeding expectations by 8%.
Breaking down the revenue growth, the cable and wire (C&W) segment contributed significantly, increasing by approximately 29% YoY to INR 77.6 billion, with a 5% beat against estimates. The fast-moving electrical goods (FMEG) segment also showed impressive growth, rising by 39% YoY to INR 6.6 billion, with a 22% beat against estimates.
However, the operating profit margin (OPM) dipped by 1.6 percentage points (pp) YoY to approximately 13%, a decline of 40 basis points (bp) against the estimated value. This was mainly due to a decrease of 2.0 pp in C&W margin, which stood at 13.1%, in line with expectations. Adjusted profit after tax (PAT) was up approximately 6% YoY at INR 7.7 billion, with a 12% beat against estimates.
Outlook and Recommendations
Looking ahead, Motilal Oswal estimates a cumulative capital expenditure (capex) of INR 26.0 billion over fiscal years 2027-28, marginally higher than the previous estimate of INR 24.5 billion over the same period. The company's net cash balance is expected to increase to INR 47.8 billion in fiscal year 2026, up from INR 41.5 billion in the same period.
Based on these estimates, Motilal Oswal values Polycab India at 40 times its estimated earnings per share (EPS) for fiscal year 2028, arriving at a revised target price of INR 9,800, up from the previous target price of INR 9,350. The research firm reiterates its "BUY" recommendation for the company.
| Quarter | Revenue (INR billion) | EBITDA (INR billion) | PAT (INR billion) |
|---|---|---|---|
| 4QFY26 | 88.6 | 11.6 | 7.7 |
| 4QFY25 | 69.9 | 10.3 | 7.3 |
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Note: The table highlights the key financial metrics for the fourth quarter of fiscal year 2026 and the corresponding period in fiscal year 2025.
Investor Takeaway
Investors should consider buying Polycab India due to its strong revenue growth and positive outlook.
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