Polycab shares fall despite 93% jump in revenue2 min read . Updated: 22 Jul 2021, 04:37 PM IST
- Here’s why shares of the largest manufacturer of wires and cables in the country fell.
Shares of Polycab fell more than 3% in early trade today after the company reported a 36% year-on-year (YoY) decline in net profit at ₹753 m for the June 2021 quarter.
The net profit declined due to one-off gains seen back in the June 2020 quarter. The net profit margin stood at 4%.
However, the company witnessed a 92.6% YoY jump in revenue at ₹18.8 bn over the same period last year.
Due to the increase in revenue, the EBITDA (earnings before interest, taxes, depreciation, and amortisation) of the company surged 144% YoY to ₹1.4 bn
Wires and cable business continues to shine
The revenue from the company's wires and cables business doubled to ₹15.9 bn from ₹7.9 bn in the same period last year.
In the domestic business, cables outperformed wires partly on account of a relatively favourable base. The revenue from the institutional business also came in higher by 2x.
Export contribution of the segment to the overall revenue increased to 6% compared to 4.5% in the March 2021 quarter.
The company’s FMEG business grew 39% YoY to ₹1.9 bn from ₹1.4 bn in the June 2020 quarter, despite the closure of retail shops across many large states, as it continued its distribution expansion with a greater thrust on digital marketing campaigns.
It also continues to focus on innovation-driven product development.
Commenting on the performance, Inder T. Jaisinghani, chairman and managing director (MD) of Polycab India said,
"First quarter performance has been encouraging.
Despite challenges posed by lockdowns in many states, we were able to record much better business compared to last year.
We remain diligent in managing costs and navigating the volatile demand environment."
More importantly, we are progressing well on our strategic agenda and achieving new milestones which will drive transformation over mid to long term. We continue to serve the communities and fulfil our purpose in meaningful ways.
As of 30 June 2021, Polycab India had a net cash position of ₹6.7 bn, growing 3.3x over the same period last year.
The company has a proven track record of strong financial performance as can be seen below.
How the markets reacted to Polycab’s June quarter results today...
Shares of Polycab opened lower at ₹1,900 on the BSE and ₹1,905 on the NSE today after the company declared its results yesterday.
The scrip then fell more than 3% in intraday trade on the exchanges.
The share touched its 52-week high of ₹2034.3 and a 52-week low of ₹795 on 5 July 2021 and 22 September 2020.
Over the last 30 days, the share price of Polycab has remained flat. However, in the last year, shares of the company are up by 137%.
Polycab (PIL) is the largest manufacturer of wires and cables in India. It’s also one of the fastest growing players in the FMEG (fast moving electric goods) space.
PIL manufactures and sells various types of cables, wires, electric fans, LED lighting, switches and switch gears, solar products, pumps and conduits, and accessories.
The company caters to various public and private institutions across a diverse set of industries, as well as retail customers through its B2C business.
It has a strong pan-India distribution network of over 4,100 authorised dealers and distributors who in turn cater to over 165,000 retail outlets.
You can compare Polycab with its peers.
This article is syndicated from Equitymaster.com
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