Polycab India gains from domestic W&C demand and solar-led FMEG growth

Investment View and Valuation

In its July 16, 2026 Q1FY27 result update, PL Research upgraded Polycab India to BUY from Accumulate following a recent correction in the share price and upward revisions to earnings estimates. The broker raised its target price to Rs 10,764 from Rs 10,503, using a sum-of-the-parts valuation based on 40 times FY28E price-to-earnings.

PL Research expects revenue, EBITDA and PAT to grow at compound annual rates of 22.6 per cent, 23.0 per cent and 22.9 per cent respectively over FY26 to FY28E. The revisions reflect strong domestic demand.

Strong Q1FY27 Financial Performance

Polycab India reported a strong Q1FY27, with sales rising 39.0 per cent year-on-year to Rs 82,097 million, 4.7 per cent above PL Research's estimate. EBITDA increased 32.5 per cent to Rs 11,362 million, 5.8 per cent above the estimate, while adjusted PAT rose 32.5 per cent to Rs 7,843 million, 10.8 per cent above the estimate.

EBITDA margin was 13.8 per cent, down 70 basis points year-on-year but 10 basis points above the broker estimate. Gross margin declined 300 basis points year-on-year to 23.8 per cent, below the estimated 25.6 per cent.

Wires and Cables: Domestic Demand Drives Growth

The Wires and Cables segment generated revenue of Rs 71,553 million, up 39.4 per cent year-on-year, supported by healthy domestic demand, execution and commodity-linked realisations. Domestic Wires and Cables revenue rose 42.8 per cent.

Wires outperformed cables, while channel sales expanded faster than institutional sales. Volumes grew in the low-to-mid single digits on a high base. Segment EBIT grew 26.4 per cent to Rs 9,533 million, but EBIT margin contracted 140 basis points year-on-year to 13.3 per cent.

The international business declined 13.0 per cent year-on-year amid geopolitical disruptions. Management retained its Wires and Cables EBIT-margin guidance of 11 per cent to 13 per cent.

FMEG: Solar and Premium Products Support Margin Expansion

FMEG revenue grew 70.7 per cent year-on-year to Rs 7,612 million, while segment EBIT rose to Rs 606 million from Rs 96 million. Segment margin consequently improved by 580 basis points to 8.0 per cent, aided by operating leverage and a richer premium-product mix.

Solar products, supported by the PM Surya Ghar Yojana, state incentives and rooftop-solar adoption, more than doubled year-on-year and remained the largest FMEG category. Premium products represented about 25 per cent of the FMEG portfolio, including about 33 per cent in fans and 38 per cent in lighting and luminaires. Management reiterated its target of a 10 per cent FMEG EBITDA margin by FY30.

EPC, Order Book and Medium-Term Outlook

The EPC business reported revenue of Rs 3,077 million, down 11.4 per cent year-on-year. However, EBIT increased 26.4 per cent to Rs 338 million and margin expanded 330 basis points to 11.0 per cent.

The BharatNet and RDSS order book stood at about Rs 1,09,000 million, comprising about Rs 80,000 million of BharatNet orders and Rs 29,000 million of RDSS orders.

Management expects medium-term demand support from transmission and distribution, renewables, manufacturing, railways, logistics, data centres, defence, electric-vehicle charging infrastructure and private capital expenditure. It reiterated its aim for exports to exceed 10 per cent of total revenue by FY30.

Working Capital

Average working-capital days improved to 15 in Q1FY27 due to higher payable days from letters of credit for raw-material purchases. Management expects working-capital days to normalise to 45 to 50 days over the long term.