India's Polycab misses Q3 profit estimates on wires business slowdown, high copper prices

R R Kabel

22/01/2025 09:36

Jan 22 (Reuters) - Polycab India  POLC.NS  reported a smaller-than-expected third-quarter profit on
Wednesday, as a slowdown in its high-margin wires business due to excess supply crimped margins.
    The company's shares slid as much as 6.4% in their biggest intraday decline since June 2024.
    Polycab's consolidated net profit increased about 11% to 4.58 billion rupees ($53 million) in the quarter,
missing analysts' average estimate of 4.80 billion rupees, according to LSEG data.
    Polycab's revenue from operations rose 20% to 52.26 billion rupees, but came in below analysts' average estimate
of 53.38 billion rupees.
    Margins in its wires business declined by 50 basis points to 13.5%.
    For further earnings highlights, click (Full Story)
    
    KEY CONTEXT
    Polycab has had to contend with heightened competitive intensity in its high-margin wires segment, where supply
remains higher than demand, analysts have said. The volatile prices of copper and aluminium, which are key raw
materials for cables and wires, have added to the company's issues.
    Its engineering, procurement and construction (EPC) business for power distribution is seeing higher growth, but
is a low-margin category. Besides, Polycab's advertising and hiring costs have also increased.
    Earlier this months, larger peer Havells India  HVEL.NS  reported a year-on-year drop in third-quarter profit
due to higher labour and advertising expenses.
    
    PEER COMPARISON
    
                                  Valuation (next 12       Estimates (next 12   Analysts' sentiment          
                                  months)                  months)                                           
                        RIC       PE      EV/EBIT  Price/  Revenue    Profit    Mean     # of      Stock to  Div
                                          DA       Sales   growth     growth    rating   analysts  price     yield
                                                           (%)        (%)       *                  target**  (%)
 Polycab India Ltd                                                                                          
 Havells India Ltd                                                                                          
 Finolex Cables Ltd                                                            Buy                          
 R R Kabel Ltd                                                                                              
 * The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
 ** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading
above the PT
       
    OCTOBER TO DECEMBER STOCK PERFORMANCE
    
 
 -- All data from LSEG
 -- $1 = 86.4625 rupees

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Polycab October to December stock performance comparison with peers    https://tmsnrt.rs/40tcTHe
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 (Reporting by Ananta Agarwal in Bengaluru; Editing by Savio D'Souza)
 ((Ananta.agarwal@thomsonreuters.com;))