Polycab India Limited - Q2 FY2026 Earnings Call Analysis

1. Financial Performance:

• Revenue: Consolidated revenue grew by 18% YoY, driven by robust performance in Wires & Cables and healthy growth in FMEG. Half-yearly revenues crossed ₹120 billion, a 21% YoY increase.
• EBITDA: EBITDA grew by 62% YoY, significantly outpacing revenue growth. EBITDA margin improved by ~430 bps YoY and ~130 bps QoQ, reaching 15.8%. Half-yearly EBITDA grew 55% YoY, with margins at 15.2%.
• PAT: PAT delivered its highest ever second quarter at ~₹7.0 billion, reflecting 56% YoY growth. PAT margins improved by ~260 bps YoY, to stand at 10.7% for the quarter. Half-yearly PAT grew 53% YoY, with PAT margins of 10.4%.
• Finance Costs & Other Income: Finance costs were ₹484 million, while other income stood at ₹454 million.

2. Operational Health:

• Order Book: EPC order book remains healthy, providing strong visibility for future growth. RDSS order book stands at ₹33.5 billion. BharatNet order book, excluding GST, is approximately ₹80 billion.
• Capacity Utilization: Wire and cable segment capacity utilization is in the mid-70s.
• Capex Plans: Capital expenditure for the quarter was ₹3.3 billion, taking H1 FY2026 expenditure to around ₹7.5 billion. The company is on track with its Project Spring guidance of investing ₹12 billion - ₹16 billion annually through to FY2030.
• Raw Material Impact (Copper/Aluminium):
  • The company uses letters of credit for raw material procurement, leading to increased payable days.
  • Inventory days were marginally higher in anticipation of strong demand in Q3 FY2026.
  • The company revises prices for distributors on a monthly basis, passing on fluctuations in copper and aluminum prices.
  • The uptrend in copper prices witnessed towards the end of September was passed on in the first week of October.
  • Hedging is used as a tool to maintain margin stability, not necessarily for improvement.
  • Gold prices have risen sharply, pushing headline inflation slightly higher, but core inflation remains moderate.

3. Market & Strategy:

• Demand Commentary:
  • Power & Infra: Higher government spending and improved project execution are driving demand. Central government capex spend continues to remain robust. An extra ₹1 trillion in tax devolution to states was released to accelerate capex and welfare spending. Private capex cycle is showing early signs of revival.
  • Real Estate: The real estate market remains strong, supporting wires demand.
  • Railways: Special purpose cables are being supplied to the railways.
• Export vs. Domestic Mix:
  • The domestic Wires & Cables business recorded a strong 21% YoY growth.
  • International business recorded a 25% YoY increase, contributing 6.5% to consolidated revenue.
  • Exports have grown 25% YoY in H1 FY2026.
• B2B vs. B2C:
  • Sales across both distribution and institutional channels showed healthy traction.
  • Exports operate mainly through institutional channels, not distributors.
• FMEG Business:
  • Fans category faced headwinds due to the prolonged monsoon season.
  • Lighting business gained traction due to festival demand.
  • Switches, switchgears, and conduit solutions saw healthy demand from real estate.
  • Solar products category was a standout performer, driven by robust demand under central and state solar rooftop incentive schemes.
• EPC Business:
  • EPC revenues declined 19% YoY due to project execution cycle.
  • The company will start executing the BharatNet project from Q3 onwards.
• EHV Segment:
  • The EHV plant is expected to be commissioned by the end of the next calendar year, with benefits from EHV sales expected in FY2028.
• Special Purpose Cables (SPC):
  • The company caters to defense, automobiles, and railways through its SPC vertical.
  • The contribution of SPC vertical to overall cables and wires is in low single digits.
• Competitive Landscape:
  • The company is monitoring the entry of new players like Adani Group and Birla Group.
  • The company's pricing premium compared to other players in the industry continues to be as it is.

4. Guidance, Outlook & Targets:

• Management Commentary:
  • The company expects continued strong demand in the second half of the year.
  • The company is closely monitoring the impact of new entrants and potential tariff changes in the US.
  • The company believes the second half should continue to be a good affair.

Metric	Target Value	Timeframe
Wires & Cables Growth	1.5x to 2x of the industry growth rate	N/A
FMEG Growth	1.5x to 2x the market rate	N/A
FMEG EBITDA Margin	8%-10%	FY2030
Export Contribution	Greater than 10%	N/A
Dividend Payout	Crossing 30%	FY2030
EBITDA Margin	11% to 13%	5-year guidance
Capex	₹12 billion to ₹16 billion annually	through to FY2030
Revenue Potential from Capex	4x to 5x turn on capex	with a lag of 1.5-2 years