Bullish on Polycab: Brokerages highlight long-term growth potential despite mixed short-term trends, project up to 33% upside

Polycab India continues to remain a favorite among brokerages, with multiple firms issuing positive recommendations despite some near-term challenges. While there are mixed opinions on recent quarterly performance, most brokerages maintain a bullish stance on the stock, underpinned by its long-term growth prospects in cables, wires, and the FMEG segment. Here’s a roundup of what leading brokerages are saying about Polycab:

Brokerage Ratings and Target Prices

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Brokerage Rating Target Price (₹)
Macquarie Outperform 7,928
Citi Buy 8,600
UBS Buy 9,000
Jefferies Buy 9,220
Morgan Stanley Overweight 7,537

Detailed Brokerage Insights

Macquarie: Outperform, Target Price ₹7,928

  • Highlights: Macquarie retains its ‘Outperform’ rating, driven by a strategic outlook that implies a 15% revenue CAGR over FY25-30.
  • Performance: Revenue was in line with estimates, with the cable and wire segment delivering better-than-expected margins.

Citi: Buy, Target Price ₹8,600

  • Positives: Revenue growth of 20% YoY came in below estimates, but margins in the wires and cables segment exceeded expectations.
  • Additional Factors: Lower losses in the FMEG business and YoY EBITDA growth that outperformed estimates were key highlights.

UBS: Buy, Target Price ₹9,000

  • Observations: Polycab missed topline consensus by 3%, but an EBITDA beat of 7% highlighted its margin strength.
  • Concerns: A slowdown in government capex impacted results, though UBS expects a recovery with increased government spending.
  • Outlook: Sequential reduction in FMEG losses added optimism.

Jefferies: Buy, Target Price ₹9,220

  • Concerns: Wire demand weakened due to lower copper prices, and higher channel inventory at the start of Q3 affected sales.
  • Outlook: Jefferies views Polycab as a strong play on capex and housing, with FY24-27 Sales/PAT CAGR of 24%/25%.

Morgan Stanley: Overweight, Target Price ₹7,537

  • Performance: Domestic cable and wire volumes were weaker than expected, with single-digit growth.
  • Positives: Margins improved, driven by exports and the wire business.
  • Outlook: Long-term growth remains attractive despite short-term volume concerns.

Conclusion: Bullish Sentiment Dominates

Despite some short-term challenges, most brokerages remain bullish on Polycab, emphasizing its long-term growth potential driven by government capex recovery, strong housing demand, and improving margins in the wires and cables segment. The stock’s focus on the fast-growing FMEG segment is also seen as a key growth driver.

With target prices ranging from ₹7,537 (Morgan Stanley) to ₹9,220 (Jefferies), Polycab offers upside potential of 22-33% from its current market price. Investors looking for exposure to infrastructure and housing-driven growth may find Polycab an attractive option in the medium to long term.