Polycab India misses Q2 profit view as costs, competition bite

R R Kabel

17/10/2024 14:05

Oct 17 (Reuters) - Polycab India  POLC.NS  reported a smaller-than-expected second-quarter profit on
Thursday as competition hurt its high-margin retail business, with a rise in expenses pressuring the
bottomline further.
    The company said its consolidated net profit rose 3.4% to 4.40 billion rupees ($52.4 million) for the
three months ended Sept. 30. Analysts, on average, had expected a profit of 4.53 billion rupees, according
to LSEG data.
    Revenue from operations rose 30.4% to 54.98 billion rupees, beating analysts' estimate of 49.56 billion
rupees.
    However, the increase in total expenses outpaced revenue growth, jumping 35% to 49.84 billion rupees.
    For further earnings highlights, click  urn:newsml:reuters.com:*:nFWN3LT0D5
    
KEY CONTEXT

    Polycab India said that lower contribution from its high-margin retail business in a highly competitive
market weighed on its bottomline.
    This countered the overall steady demand in the company's cables and wires segment, aided by government
infrastructure investments and rising real estate demand.
        The segment accounted for about 83% of its total revenue. 
  
    Larger peer Havells India  HVEL.NS  missed second-quarter estimates on lower demand for its air
conditioners and fans on back of the monsoon season and higher expenses.

    
PEER COMPARISON 
    
                            Estimates         Analysts' sentiment                              
                             (next 12                                                          
                             months)                                                           
                 RIC        PE    EV/E  Revenue growth   Profit  Mean     # of      Stock to   Div yield (%)
                                  BITD      (%)          growth  rating*  analysts  price      
                                  A                         (%)                     target**   
 Polycab India    POLC.NS   50.4  34.8       17.79       22.42   Buy            26    1.06              0.40
 Ltd                           0     6                                                         
 Havells India    HVEL.NS   65.2  44.4       15.24       25.20   Hold           20    1.02              0.46
 Ltd                           6     6                                                         
 Finolex Cables   FNXC.NS   26.4  22.9       14.59       13.80   Buy             5    0.83              0.61
 Ltd                           6     4                                                         
 R R Kabel Ltd    RRKA.NS   43.2  29.0       18.55       32.69   Buy             9    0.85              0.34
                               6     0                                                         
 
* 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
    
JULY-SEPTEMBER STOCK PERFORMANCE 
    
    
-- All data from LSEG IBES

-- $1 = 84.0280 Indian rupees


($1 = 84.0280 Indian rupees)

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Polycab India    https://tmsnrt.rs/3UdV6RQ
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 (Reporting by Dimpal Gulwani and Ashna Teresa Britto; Editing by Janane Venkatraman)
 ((dimpal.gulwani@thomsonreuters.com))