Polycab India is trading at ₹6,921.00 on the NSE on Tuesday, March 24, up 1.85 percent or ₹126.00 from its previous close of ₹6,795.00, touching an intraday high of ₹7,001.50 in early trade. The stock is in focus after the cables and electricals firm reported its December 2025 quarter earnings, which delivered headline growth numbers that look exceptional on the surface but contain margin details that explain why Morgan Stanley, while maintaining its Overweight rating, has cut its target price from ₹9,659 to ₹8,707.
The Q3 Numbers in Full
Polycab’s December 2025 quarter results were strong on the top line and profit line but showed pressure where analysts look most carefully: margins.
Net profit for the December 2025 quarter rose 35 percent to ₹620 crore against ₹460 crore in the corresponding quarter of the previous fiscal. Revenue rose 46 percent to ₹7,640 crore from ₹5,230 crore a year ago. Operating EBITDA climbed 34.17 percent to ₹966 crore against ₹720 crore on a year over year basis. These are impressive absolute numbers for India’s largest manufacturer of wires and cables.
But the margin picture tells a more complicated story. PAT margins fell to 12.70 percent from 13.80 percent a year ago, a compression of 110 basis points. EBITDA margin for the quarter narrowed by over 100 basis points to 12.66 percent from 13.8 percent last year. A company growing revenue at 46 percent but seeing margins compress simultaneously is one where the growth is outpacing the profitability improvement, a pattern that warrants scrutiny.
Two specific cost lines are driving the margin compression. Advertising and sales promotion expenses more than doubled to ₹91 crore from ₹37.3 crore, reflecting Polycab’s aggressive brand building push in its fast-moving electrical goods segment. Finance costs also rose to nearly ₹69 crore from ₹50 crore in the year-ago period, reflecting higher borrowing costs in the current interest rate environment.
Why Morgan Stanley Cut the Target Despite Maintaining Overweight
Morgan Stanley’s response to the results, maintaining Overweight but cutting the target price from ₹9,659 to ₹8,707, is a classic brokerage move that says the business remains structurally sound but the near-term numbers require recalibration. The key details from the Morgan Stanley note reveal what specifically concerned the analysts.
EPS estimates have been cut approximately 5 percent for financial years 2026 through 2028. Cable and wire revenue estimates have been cut 4 to 5 percent across the same period. FMEG, the fast-moving electrical goods segment where Polycab has been investing heavily in brand building, sees revenue estimates cut 2 to 3 percent. The margin trajectory Morgan Stanley now projects shows a gradual compression from 13.4 percent in FY26 to 13.2 percent in FY27 to 13.0 percent in FY28, a steady if modest deterioration from current levels.
The one constructive number in the Morgan Stanley note is the cables and wires revenue CAGR expectation of approximately 20 percent from FY25 to FY28. A 20 percent compound annual growth rate in the core business over three years is a strong structural growth outlook that justifies the Overweight rating even as near-term margin estimates come down.
The Polycab Business at a Glance
Polycab India is the country’s largest manufacturer of wires and cables, operating across 23 manufacturing facilities, more than 15 offices, and more than 25 warehouses spanning India. Its dominance in the wires and cables segment gives it structural exposure to India’s infrastructure buildout, real estate construction cycle, and the expanding power grid that underlies India’s energy transition ambitions. These long-cycle growth drivers are largely insulated from the kind of short-term geopolitical volatility that is affecting most Indian stocks right now.
The FMEG segment, which includes fans, lights, switches, and other electrical goods, is where Polycab has been investing in brand and distribution to diversify beyond its core B2B cables business into consumer-facing products. The doubling of advertising expenses to ₹91 crore reflects that investment in brand building. The near-term margin cost of that investment is visible in the Q3 numbers. The long-term payoff, if Polycab successfully builds a consumer brand at scale in the FMEG segment alongside its dominant cables position, would be significant. Morgan Stanley’s 2 to 3 percent FMEG revenue cut suggests it is waiting for clearer evidence of that payoff before upgrading its estimates.
Where the Stock Stands
Polycab at ₹6,921 sits in a year range of ₹4,567.00 to ₹8,722.00. The stock is trading well below both its 52 week high and Morgan Stanley’s revised target of ₹8,707, implying upside of approximately 26 percent from current levels even on the cut target. The market capitalisation at ₹1.04 lakh crore reflects a company that the market respects as a structural compounder even through a period of margin pressure. The P/E ratio of 39.59 is not cheap in absolute terms but is reasonable for a market leader with a 20 percent revenue CAGR expectation in its core segment.
Tuesday’s 1.85 percent gain reflects the market’s relief that the Q3 numbers, while showing margin compression, confirmed strong top-line momentum and did not reveal any structural problem with Polycab’s business model. The earnings were good enough to buy. Morgan Stanley’s target cut was already anticipated by the market given the visible margin trends. What remains is the question of whether FY26 and FY27 can deliver margin recovery as the FMEG brand investment matures and as raw material cost pressures from the current crude price environment eventually ease.
For a company growing revenue at 46 percent, a 35 percent profit increase, and a brokerage maintaining Overweight with a target implying 26 percent upside from current levels, Tuesday’s modest 1.85 percent gain may understate how the market will eventually price this stock once the margin trajectory stabilises.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial or investment advice.