Polycab India Limited Q1 FY26 Earnings Call Analysis

1. Financial Performance:

• Revenue: Consolidated revenue grew by 26% YoY, driven by the Wires and Cables business.
• EBITDA: Grew by 47% YoY, outpacing revenue growth.
• EBITDA Margin: Improved by 210 basis points to 14.5%, attributed to strategic pricing, operational efficiencies, and favorable business mix.
• PAT: Highest-ever Q1 PAT at approximately ₹6 billion, a 49% YoY growth.
• PAT Margin: Improved by approximately 170 basis points to 10.2%.
• Finance Costs: ₹513 million.
• Other Income: ₹799 million.

2. Operational Health:

• Order Book: EPC open order book remains healthy at ₹80 billion (including BharatNet projects).
• Capacity Utilization: Not explicitly discussed, but the company is investing in capacity expansion.
• Capex: ₹4.1 billion for the quarter, in line with Project Spring guidance of ₹12-16 billion annually through FY30. Primarily allocated to Cables and Wires business and backward integration.
• Working Capital Cycle: Stood at 43 days, expected to normalize to 50-55 days in coming quarters.
• Raw Material Impact:
  • Copper: Strategic pricing actions taken to maximize benefits from commodity price movements. Hedging policy continues to be followed.
  • Aluminium: Volume mix largely unchanged.

3. Market & Strategy:

• Demand Commentary:
  • Power & Infra: Strong tailwinds from infrastructure spending and government capex. Government spending since December of last year has been significantly higher, translating into demand for cables. RDSS scheme continues to generate traction.
  • Real Estate: Buoyant real estate sector, with focus on value-added offerings. Healthy demand from the real estate sector for switches, switchgears, and conduit solutions. Residential housing doing well, with pickup in Tier 3 to 5 cities.
• Export vs. Domestic Mix:
  • Domestic W&C business recorded 32% YoY revenue growth.
  • International business grew by 24% YoY, contributing 5.2% to consolidated revenue.
• B2B vs. B2C: Not explicitly broken out, but the company is increasing spends on A&P for the B2C business.
• FMEG: Premiumization strategy is showing results, with premium products contributing significantly to sales in fans and lighting categories. Solar product category recorded more than 2x growth.

4. Guidance, Outlook & Targets:

• Management Commentary:
  • Commodity Prices: Expects copper price volatility to remain manageable.
  • Government Capex: Expects government infrastructure spending to continue at a strong pace.

Metric	Target Value	Timeframe
FMEG Revenue Growth	1.5 to 2x Industry Growth	Long Term
FMEG EBITDA Margin	8% to 10%	FY30
W&C EBITDA Margin	11% to 13%	Long Term
Annual Capex	₹12 billion to ₹16 billion	Through FY30
EPC Margin (BharatNet)	12% to 14%	N/A
EPC Margin (RDSS)	High Single Digit	N/A
A&P Spends (B2C)	3% to 5% of Top-line	N/A