Polycab India growth momentum strengthens as wires, cables and FMEG outperform estimates

Investment View and Earnings Outlook

Prabhudas Lilladher's October 16, 2026 report retains its BUY view on Polycab India following a strong Q2 FY27 performance, supported by accelerating growth in the Wires and Cables and FMEG businesses.

The broker expects favourable domestic demand conditions and continued execution to support revenue, EBITDA and PAT CAGRs of 24.3 per cent, 24.6 per cent and 24.6 per cent, respectively, over FY26 to FY29E. It has increased its FY28E and FY29E EPS estimates by 2.9 per cent and 1.8 per cent, respectively, reflecting stronger-than-expected domestic demand and a positive outlook.

Q2 FY27 Financial Performance

EBITDA margin declined 140 basis points year on year because gross margin contracted 350 basis points to 23.6 per cent. However, gross margin was 90 basis points above the broker's estimate and 60 basis points above Q1 FY27.

Business Segment Performance

Wires and Cables

Wires and Cables revenue grew 47.4 per cent year on year to Rs 8,301 crore in Q2 FY27. Domestic revenue increased 50 per cent, supported by demand from government and private-sector customers, strong execution and favourable commodity-linked realisations.

Management reported early double-digit volume growth in wires and mid-single-digit growth in cables. Wires outperformed cables, while channel sales grew faster than institutional sales. Export revenue increased 17 per cent year on year despite geopolitical challenges.

Wires and Cables EBIT increased 38.5 per cent year on year to Rs 1,178 crore. EBIT margin declined 90 basis points year on year to 14.2 per cent, but improved by about 90 basis points sequentially through operational efficiencies and a favourable product mix. Management remains confident of sustaining medium-to-long-term EBIT margin within its guided range of 11 per cent to 13 per cent.

FMEG

FMEG revenue increased 123.8 per cent year on year to Rs 993 crore, with broad-based category growth and multifold growth in solar products. FMEG EBIT was Rs 101 crore, while EBIT margin expanded 960 basis points year on year to 10.1 per cent, supported by operating leverage, premiumisation and product mix.

EPC and Other

The EPC and other segment generated revenue of Rs 617 crore, up 53.4 per cent year on year.

Demand Outlook and Execution

Management sees medium-term demand support from transmission and distribution, renewables, manufacturing, railways, logistics, data centres, defence, EV charging infrastructure and a recovery in private capital expenditure.

• The commissioning of the EHV plant has been delayed from December 2027 to FY28, postponing the capacity ramp-up.
• The NCLAT's interim stay on CIRP proceedings relating to an Asier Metals claim of Rs 2.79 crore offers near-term relief.
• Management expects no material operational or financial impact from the Asier Metals matter, although it remains relevant.

Valuation and Estimates

Prabhudas Lilladher values Polycab India on a sum-of-the-parts basis and has raised its target price to Rs 11,083 from Rs 10,786, using 35 times September 2028E EPS.

Investment Thesis and Key Risks

The investment thesis depends on sustained domestic demand, continued margin execution, FMEG scale-up and timely capacity expansion.

• Commodity-linked gross-margin pressure.
• Geopolitical effects on exports.
• Delay in EHV plant commissioning and the resulting postponement of capacity ramp-up.