Sharekhan Assigns Buy Call To Mid Cap Multibagger Consumer Durables Stock Amid Promising Outlook

Sharekhan has assigned buy call to Consumer Durables sector stock, Polycab India Ltd amid promising long-term outlook. The analyst has recommended investors to buy Polycab India Ltd with a target price of Rs 3215 apiece. If you buy the stock at the current market price of Rs 2672, you can get 20% return. Check key takeaways below:

1. Polycab India Stock Performance

The last trading price of the stock is Rs 2672 apiece with an intraday dip of 0.04%. The stock has a market capitalisation of Rs 40,005 crore. The stock has given 157% return in last 3-years, 13% in last 1-year, and 7% in last 3-months.

Emerging Opportunities And Vast Distribution Reach Would Drive Growth

The domestic W&C market, estimated at Rs. 60,000 65,000 crore, makes up more than 40% of the Indian electrical industry. Polycab's W&C segment is set for strong long-term growth as it is witnessing demand from real estate and other private sectors.

Consumer preferences are now skewed towards branded products which is being supported by wide distribution reach of the organised players. The company's distribution network comprises 4,600+ dealers and distributors and 2,05,000 retail outlets (second only to Bajaj Electricals), which gives the company a strong competitive advantage. The company states that 87% of its business is driven by dealers & distributors.

3. Aims Industry Leading Growth

Polycab is confident of delivering industry leading growth in the long-term. It is focused on ramping up FMEG business through realignment of its distribution strategy and merging of verticals.

The company reiterated its initiative, Project Leap, through which it intends to achieve a revenue of Rs. 20,000 crore by FY2026E. The company would incur an annual capex of Rs. 400 crore per annum of which two-thirds would be spent towards cables segment to augment exports, maintenance capex as well as building capabilities in products where utilization is very high.

4. Valuation

According to to Sharekhan, "Polycab is tapping emerging opportunities in data centers, telecom, defence and EVs. Operating performance is likely to further improve on y-o-y basis with increase in scale and backward integration. Thus, the company is on a healthy long-term growth trajectory, owing to its leadership position and a strong product portfolio both in W&C and FMEG. Hence, we recommend Buy with an unchanged PT of Rs. 3,215 (based on September FY24E EPS)."

Key Risks: Wide fluctuations in raw material prices, weak consumer sentiments due to inflation and intense competition are key concerns.

5. About Polycab

POLYCAB manufactures and sells wires and cables and FMEGs besides executing a few EPC projects. The company has 25 manufacturing facilities, including two joint ventures with Techno and Trafigura, located across Gujarat, Maharashtra, Uttarakhand, and the union territory of Daman and Diu. POLYCAB strives to deliver customised and innovative products with speed and quality service.

Disclaimer

The stock has been picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.