Polycab India - Q1FY21 result update - YES SECURITIES

BUY (Target Rs908, Upside 10.4%)

Polycab's operational performance was better than expected led by higher exports and pickup in demand for housing wires in June. Improved presence in US and Australia aided exports growth eventhough there was no contribution from Dangote order this quarter. Housing wire segment growth picked up in June largely from non-metro regions and due to some pre-buying by dealer (copper prices have rallied 24% since start of June). FMEG performance picked up in June (flat yoy). Q1 decline was largely due to loss of sales during peak season of fans. Polycab witnessed marginally growth in July led by strength in exports & HW and higher copper prices. Bottomline outperformance was aided by one-offs related to income tax refund, investment in JV and forex gains.

We believe earnings revival would be led by exports and FMEG business. Polycab would benefit from the anti-China sentiment and penetration in exports market would be faster than expected. We have marginally raised our estimates factoring in higher contribution from exports. Current valuations of 16.3x FY22E P/E appear reasonable. Rerating would be gradual as FMEG share increases. We maintain our Buy rating on the stock with a revised target price of Rs908 (18x FY22E P/E).

Shares of Polycab India Ltd. was last trading in BSE at Rs. 825 as compared to the previous close of Rs. 823.50. The total number of shares traded during the day was 1375 at an average price of Rs. 827.22.

The stock hit an intraday high of Rs. 835.35 and intraday low of Rs. 822.40.

Source : Equity Bulls

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