Polycab India shares in focus ahead of Q3 earnings concall; What PL says on results

hares of Polycab India Ltd will be focus on Friday morning after the company said it delivered the highest-ever December quarterly profit after tax of Rs 416.50 crore, up 15 per cent YoY, thanks to a 17 per cent jump in sales on account of strong volume growth in wires & cables business. The figures came against analyst projections of up to 22 per cent rise in year-on-year (YoY) profit on 12-20 per cent jump in sales.

The company would be hosting an earnings conference call at 12 pm today, wherein the senior management of the company will discuss financial results for the quarter. 

Polycab India said its Ebitda margin for the third quarter fell 130 basis points sequentially to 13.1 per cent, mainly due to higher A&P spends. Analysts too were expecting margin to fall sequentially but rise YoY.

Chairman and Managing Director Inder T Jaisinghani said: "With a keen eye on emerging trends, Polycab aims to continue its upward trajectory, creating long-term value for our stakeholders.”

For the quarter, the Wires & Cables business saw a volume growth-led sales growth of 18 per cent YoY. Polycab India said the demand environment stayed strong, supported by the government's continuous focus on infrastructure development and a pickup in private capital expenditure.

"Domestically, both distribution and institutional businesses reported robust performances. Revenue from International business contributed 6.2 per cent to the consolidated revenue for the quarter. The Company anticipates a healthy performance in International business during Q4 FY24 and beyond. EBIT margin for the quarter stood at 14 per cent, witnessing a YoY improvement of 20 bps, it said.

As far as the FMEG business was concerned, the company logged a de-growth of 15 per cent YoY in Q3, due to sustained weakness in consumer demand.

"The Fans segment grew sequentially, but registered YoY de-growth, on account of a higher base of the previous year due to stock liquidation activities prior to the BEE transition. The Lights segment continued to decline, adversely impacted by further pricing erosion. Both Switches & Switchgears segments exhibited robust growth during the quarter," it said.

Higher Advertising and Promotion (A&P) spends and the absence of economies of scale resulted in accelerated bottom-line de-growth, the company said while noting that  it has merged the FMEG and Power businesses under a unified business unit head during the quarter.

PL view

Prabhudas Lilladher (PL) said revenue growth was 4 per cent below its estimates but in-line with the consensus estimate. It noted that gross margins expanded by 130 bps YoY to 27 per cent against its expectations of 26 per cent. Ebitda growth was 2.2 per cent above its estimates but 6 per cent below the consensus estimate. Ebitda margins contracted 50 bps YoY to 13.1 per cent against PL's estimate of  13.4 per cent and the consensus estimate of 13.8 per cent.

PBT was up 13.4 per cent YoY to Rs 550 crore against PL's estimate of Rs 510 crore; higher other income compensated with higher interest cost & depreciation, it said. Profit came in higher than PL estimate of Rs 37 crore but 1.2 per cent below the consensus estimate.

 

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