Polycab India Q3 results: Dec IT raids may impact sales; profit may rise up to 25%; analysts share views

Polycab India Ltd will report its December quarter results on Thursday. The cables and wires maker, whose shares fell sharply due to income tax raids of late, is seen reporting up to 25 per cent surge in year-on-year (YoY) profit on 12-20 per cent rise in revenue. Some impact of December IT raids on sales is likely, analysts said, as they see margin for Polycab India dropping sequentially but rising on an year-on-year basis.

Domestic brokerage Anand Rathi expects Polycab India to report 16.1 per cent YoY rise in net profit at Rs 415.30 crore for the quarter on 18.7 per cent rise in sales at Rs 4,409 crore. It sees Ebitda margin for the quarter coming in at 14.1 per cent against 14.4 per cent in September and 13.6 per cent in the year-ago quarter.

BNP Paribas sees adjusted profit at Rs 447.20 crore, up 25 per cent. It sees sales rising 22 per cent to Rs 4,539.20 crore amid resilience in the  demand for cables and wires, both in domestic and international market. Margin is seen coming in at 14.4 per cent, up 80 basis points YoY, primarily on its commodity hedging policy and increasing contribution from  exports, even as the FMEG segment margins may remain under pressure.

BNP Paribas said it would wish to know the impact of commodity prices volatility on channel inventory, commentary around  demand expectations going into the election season and profitability revival for the fast moving electrical goods (FMEG) business.

Nirmal Bang sees profit for Polycab India surging 22.6 per cent YoY to Rs 438.50 crore. Sales, it said, may Rs 20 per cent YoY to Rs 4,458 crore. Another brokerage Phillip Capital sees profit rising 18.1 per cent and revenue 17.9 per cent YoY. It suggested strong growth in B2B, exports and south and east markets in W&C.

"We expect growth of 17 per cent in Q3 in W&C (we expect last 10 days of quarter sales impacted mainly due to IT raids). FMEG impacted because of fans. Control on costs helped margins," it said.

Axis Securities believes a strong growth in the B2B segment and exports to drive Polycab India numbers. It said stability in raw material prices should improve profitability. This domestic brokerage forecast 15.2 per cent YoY rise in profit at Rs 416 crore. The brokerage expect Polycab revenue to jump 16.5 per cent YoY to Rs 4,330 crore. It sees Ebitda rising 19.5 per cent to Rs 602 crore and Ebitda margin coming at 13.9 per cent.

Polycab India shares are down 21.80 per cent in the last one month. On Wednesday, the stock rose 2.32 per cent to Rs 4,440.05. Jefferies recently maintained its target of Rs 7,000 on the stock.

Prabhudas Lilladher expects Polycab India's revenue to grow 12 per cent YoY with Wires & Cables sales growing 11.1 per cent, a lower growth due to last 10 days of disruption in business and slowdown in wire business.

 

"FMEG expected growth of 4 per cent YoY impacted due to seasonally weak quarter for fan segment. We expect margins to contract by 20 bps YoY with loss of sales. PAT to grow by 4.7 per cent YoY," Prabhudas Lilladher said.

 

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