Earnings Outlook
Polycab India Jul-Sept earnings seen up on robust demand
This story was originally published at 20:55 IST on 15 October 2024
Register to read our real-time news.Informist, Tuesday, Oct. 15, 2024
MUMBAI – Polycab India Ltd. is expected to report healthy growth in key earnings metrics in the September quarter, driven by robust demand from infrastructure projects and inventory build-up ahead of the festive season, analysts said. However, exports are likely to have declined on an annual basis during the quarter.
The Mumbai-based company is expected to clock a consolidated net profit of INR 4.5 billion in the September quarter, up 5.9% from INR 4.3 billion in the year-ago period, as per an average of estimates compiled by Informist from ten brokerage firms. On a sequential basis, the bottom line is expected to grow by 13.8% from INR 4 billion in the June quarter. The estimates for net profit ranged from INR 4.28 billion by Nuvama Wealth Management to INR 4.75 billion by YES Securities (India).
The company's consolidated revenue is seen up by 19% on year and 7% sequentially at INR 50.16 billion in Jul-Sep. The estimates for net sales range from INR 48.65 billion by Anand Rathi Share and Stock Brokers to INR 52.33 billion by Elara Securities (India).
"While (raw material) volatility would have weighed on domestic channel sentiment in July and August, a sudden and sharp rally could have led to some channel re-stocking in September," Kotak Institutional Equities said in a report. A steady volume growth is expected in the September quarter due to channel stocking, analysts said. Nuvama Institutional Equities expects the company to report mid-teens volume growth in Jul-Sept as the demand remains healthy.
The company's earnings before interest, taxes, depreciation, and amortisation is expected to be in the range of INR 6.37 bln-6.73 billion in Jul-Sep, as per estimates of eight brokerage reports. The EBITDA margin is seen declining on a year-on-year basis due to weak exports, volatility in copper prices and the high base of the year-ago period. However, the same metric is seen expanding on a sequential basis.
"Players like Polycab could see further margin compression on account of lower US exports (a high margin business) and higher execution of EPC (engineering, procurement, and construction) business (lower margin business)," Nirmal Bang Equities said in a report. Exports are expected to remain weak due to the soft macroeconomic environment, Sharekhan said in a report. However, much like the operating margin, exports are expected to see an improvement quarter-on-quarter.
The company is expected to report its September quarter earnings on Thursday. On Tuesday, the stock closed at INR 7,489.30, marginally higher than the previous close, on the National Stock Exchange.
Following are the Jul-Sept earnings estimates for Polycab India based on reports compiled by Informist from 10 brokerage houses:
Brokerage firm | Net Sales (in mln INR) | Net Profit (in mln INR) | EBITDA (in mln INR) |
| Anand Rathi Share and Stock Brokers Ltd | 48,645.00 | 4,425.00 | - |
| Centrum Broking Ltd | 50,439.00 | 4,544.00 | 6,629.00 |
| Elara Securities (India) Pvt Ltd | 52,326.00 | 4,541.00 | 6,641.00 |
Kotak Institutional Equities | 50,777.00 | 4,460.00 | 6,516.00 |
Motilal Oswal Financial Services Ltd | 49,785.00 | 4,562.00 | 6,610.00 |
| Nirmal Bang Equities Pvt Ltd | 49,500.00 | 4,373.00 | 6,416.00 |
| Nuvama Wealth Management Ltd | 49,996.00 | 4,277.00 | 6,518.00 |
| Prabhudas Lilladher Pvt Ltd | 48,793.00 | 4,423.00 | 6,372.00 |
| Sharekhan Ltd | 50,500.00 | 4,700.00 | - |
| YES Securities (India) Ltd | 50,796.00 | 4,752.00 | 6,731.00 |
Average | 50,155.70 | 4,505.70 | 6,554.13 |
End
Reported by Anjali Singh
Edited by Vidhi Verma
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