Polycab India’s Q2 is robust even as competition heats up
Polycab India’s consolidated revenue for the September quarter (Q2FY27) rose 53% year-on-year to nearly ₹10,000 crore, driven by robust demand across segments.
Ebitda rose at a slower pace, by about 40%, to ₹1,422 crore, driven by a sharp 60% increase in raw material costs due to the surge in copper prices. Ebitda margin contracted 140 basis points (bps) year-on-year to 14.2%, and it improved by about 60 bps sequentially, driven by operational efficiency and favourable product mix.
Consequently, for H1FY27, revenue increased by 46% to ₹18,100 crore, while Ebitda rose 36% to ₹2,560 crore.
Despite robust demand, driven by investment in infrastructure and electrification, Polycab faces intensifying competition following UltraTech Cement’s launch of its wires & cables (W&C) brand Ultravolt in early September.
Polycab’s management expects the impact to be limited. It said in the Q2 earnings call that the new entrant is primarily targeting the wires segment, which accounts for around 30% of total W&C market of ₹1.1 trillion. Also, Polycab is not planning any pricing action currently to defend its market share.
Jefferies India estimates that Ultravolt’s sales can form about 5-6% of FY30 C&W market, and with the informal market being about one-fourth of the total industry, there is headroom for a new player. However, JM Financial Institutional Securities strikes a cautious view.
“While one could debate market share losses for incumbents since the industry comprises ~20% unorganised players, margin risk sustains given the likelihood of disrupted pricing discipline,” the brokerage stated in a 1 September industry report.
ICICI Securities similarly noted, “In our view, Polycab's established brand and scale provide competitive advantages, but pricing behaviour, new capacity additions, and the pace of market share gains should be monitored closely as competition intensifies.”
Polycab’s operational performance for Q2FY27 remains strong. Its W&C business, contributing around 84% of Polycab’s revenue, grew 47% year-on-year, with volumes rising in the mid-to-high single digits, according to the management. International business also recovered strongly despite geopolitical challenges, growing 17% after declining 13% in the previous quarter.
Meanwhile, Polycab’s fast-moving electrical goods (FMEG) segment’s revenue rose over 120% year-on-year, led by solar products and expansion of the product portfolio. The segment’s contribution to consolidated revenue doubled to 10% in Q2. The engineering, procurement and construction (EPC) segment, which accounts for around 6% of revenue, also recorded robust growth of 53%.
Amid concerns over intensifying competition, Polycab’s shares have declined nearly 20% from their 52-week high of ₹10,126 apiece seen on 22 June. The stock is trading at a one-year forward price-to-earnings ratio of about 34 times, below its five-year average multiple of 37.5x, according to JM Financial. All eyes are now on the impact of new entrant on Polycab’s market share and profitability.