Polycab Shares Fall Despite 93% Jump in Revenue - Views on News from Equitymaster

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Polycab Shares Fall Despite 93% Jump in Revenue

Jul 22, 2021

Shares of Polycab fell more than 3% in early trade today after the company reported a 36% year on year (YoY) decline in net profit at Rs 753 m for the June 2021 quarter.

The net profit declined due to one-off gains seen back in the June 2020 quarter. The net profit margin stood at 4%.

However, the company witnessed a 92.6% YoY jump in revenue at Rs 18.8 bn over the same period last year.

Due to the increase in revenue, the EBITDA (earnings before interest, taxes, depreciation, and amortisation) of the company surged 144% YoY to Rs 1.4 bn

Wires and cable business continues to shine

The revenue from the company's wires and cables business doubled to Rs 15.9 bn from Rs 7.9 bn in the same period last year.

In the domestic business, cables outperformed wires partly on account of a relatively favourable base. The revenue from the institutional business also came in higher by 2x.

Export contribution of the segment to the overall revenue increased to 6% compared to 4.5% in the March 2021 quarter.

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The company's FMEG business grew 39% YoY to Rs 1.9 bn from Rs 1.4 bn in the June 2020 quarter, despite the closure of retail shops across many large states, as it continued its distribution expansion with a greater thrust on digital marketing campaigns.

It also continues to focus on innovation-driven product development.

Commenting on the performance, Inder T. Jaisinghani, chairman and managing director (MD) of Polycab India said,

  • First quarter performance has been encouraging.

    Despite challenges posed by lockdowns in many states, we were able to record much better business compared to last year.

    We remain diligent in managing costs and navigating the volatile demand environment.

    More importantly, we are progressing well on our strategic agenda and achieving new milestones which will drive transformation over mid to long term. We continue to serve the communities and fulfil our purpose in meaningful ways.

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As of 30 June 2021, Polycab India had a net cash position of Rs 6.7 bn, growing 3.3x over the same period last year.

The company has a proven track record of strong financial performance as can be seen below.

Polycab Financial Performance (2017-2021)

How the markets reacted to Polycab's June quarter results today...

Shares of Polycab opened lower at Rs 1,900 on the BSE and Rs 1,905 on the NSE today after the company declared its results yesterday.

The scrip then fell more than 3% in intraday trade on the exchanges.

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The share touched its 52-week high of Rs 2034.3 and a 52-week low of Rs 795 on 5 July 2021 and 22 September 2020.

Over the last 30 days, the share price of Polycab has remained flat. However, in the last year, shares of the company are up by 137%.

About Polycab

Polycab (PIL) is the largest manufacturer of wires and cables in India. It's also one of the fastest growing players in the FMEG (fast moving electric goods) space.

PIL manufactures and sells various types of cables, wires, electric fans, LED lighting, switches and switch gears, 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.

It has a strong pan-India distribution network of over 4,100 authorised dealers and distributors who in turn cater to over 165,000 retail outlets.

For more details about the company, you can have a look at Polycab's factsheet and Polycab's quarterly results on our website.

You can also compare Polycab with its peers.

Polycab vs Finolex Cables

Polycab vs Dynamic Cables

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Ayesha Shetty

Ayesha Shetty is a financial writer with the StockSelect team at Equitymaster. An engineer by qualification, she uses her analytical skills to decode the latest developments in financial markets. This reflects in her well-researched and insightful articles. When she is not busy separating financial fact from fiction, she can be found reading about new trends in technology and international politics.

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