Polycab India - Q4 FY21 Result Update - YES Securities

(Rating: BUY, TP: Rs2,012, Upside: 15.7%)

- Polycab delivered better than expected revenue growth of 43%, with strong growth across its B2C product portfolio. Gross margins contracted by 519bps yoy on higher commodity prices. Cost control measures have restricted contraction of EBITDA margins.

- B2C business delivered strong growth with FMEG registering growth of 89%, highest among peers. Wires, which is a B2C business has sustained its growth momentum delivering superior growth.

- We estimate the company to deliver FY21-23E revenue/EBITDA CAGR of 15%/16% respectively. Considering a strong execution track record, 5-year vision plan and increasing proportion of B2C business, we increase our target multiple to 28x from earlier 25x and maintain BUY with TP of Rs2,012. Polycab still trades at a significant discount to players like Havells, Crompton which should continue to narrow gradually.

Source : Equity Bulls

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