Elara Securities
Target Price: INR 8,290
CMP: ₹6,550.25
Polycab India is a market leader in India’s ₹80,000 crore cables & wires (C&W) industry in FY24 with a share of 25-26 per cent (Source: FY24 Annual Report). The top five firms have announced a cumulative capex of ₹5,800 crore in C&W during the next three years, driven by infrastructure capex, a rise in domestic manufacturing and exports. Management earmarked ₹3,000 crore capex plan, including FMEG, the highest among peers.
India is set for a capex boom over FY24-35, led by rising government capex and a revival in private capex. As per our estimates, we expect the overall capex outlay to touch ₹107-lakh-crore during FY24-35. This presents a huge revenue potential of ₹3.2tn for the C&W industry. We expect it to post a revenue CAGR of 19 per cent during FY24-27E.
Polycab has entered into a partnership with Swiss cable manufacturer Brugg Cables to foray into the extra high voltage (EHV) market. With this move, it will become the second company to supply C&W across verticals. Polycab’s transformational journey under Project LEAP aims to reach a target of ₹20,000 crore by FY26 from ₹8,800 crore in FY21
We initiate on Polycab with a Buy rating and a TP of ₹8,290. Key downside risks are a capex delay, overall economic slowdown, resulting in lower infra demand, and weakness in consumer demand.