Polycab Share Review: Should You Buy, Sell, or Hold?

Polycab India Limited, a major player in the wires and cables industry, has been expanding its presence across various sectors, making it an attractive stock for investors. But with the stock’s strong performance and market positioning, the question remains: Should you buy, sell, or hold Polycab shares?

Company Overview

Polycab India Limited is a diversified player primarily known for manufacturing wires and cables. Over the years, it has expanded into fast-moving electrical goods (FMEG) such as fans, LED lighting, switches, switchgear, and domestic appliances. It also undertakes engineering, procurement, and construction (EPC) projects, adding another dimension to its revenue streams.

Key Metrics:

• Market Cap: ₹1,04,599 Cr
• ROE: 21.79%
• P/E Ratio: 58.75
• Dividend Yield: 0.43%
• Debt to Equity: 0.02

Also Read: Piramal Pharma Share Analysis: Key Financial Metrics, Market Position, and Future Outlook

Fundamentals and Financial Performance

Polycab has shown consistent growth in both revenue and profits. Here’s a look at its financial trajectory:

Revenue Growth (Rs. Cr):

• Jun 2023: ₹3,953 Cr
• Jun 2024: ₹4,756 Cr

Profit Growth (Rs. Cr):

• Jun 2023: ₹403 Cr
• Jun 2024: ₹402 Cr

While the revenue continues to grow, the recent profit decline in Jun ’24 raises questions about short-term profit stability. However, the company’s long-term financials tell a promising story.

Net Worth (Rs. Cr):

• 2020: ₹3,851 Cr
• 2024: ₹8,243 Cr

The substantial rise in net worth signals solid growth, and its near-zero debt-to-equity ratio (0.02) indicates strong financial health.

Also Read: Is NHPC Share a Good Buy?

Valuation

At a P/E ratio of 58.75, Polycab’s valuation is higher than the industry average of 54.85, indicating that the stock is expensive relative to peers. Its P/B ratio of 12.78 also points to a premium valuation, suggesting that investors are willing to pay a higher price for the stock due to its consistent performance and growth potential.

Peer Comparison

In comparison to its peers like KEI Industries (P/E 63.61) and Finolex Cables (P/E 29.36), Polycab stands strong in terms of market cap and performance. However, its valuation is relatively high, which could make some investors cautious.

Polycab’s strong market position is evident, but its high valuation could limit its immediate upside potential when compared to cheaper peers.

Also Read: Kalyan Jewellers Stock Analysis: Key Metrics, Financial Health, and Future Outlook

Cash Flow and Capital Allocation

Polycab has maintained a healthy cash flow from operations, which is crucial for any growing company. However, its investing activities show significant capital expenditures, reflecting its expansion strategy, particularly in the FMEG and EPC segments.

• Operating Cash Flow (2023): ₹1,428 Cr
• Cash Flow from Investing Activities (2023): -₹1,203 Cr

Despite these expenditures, the company’s minimal debt and steady dividend payouts (₹209.45 Cr in 2023) show a balanced approach to growth and shareholder returns.

Shareholding and Institutional Interest

Promoters hold a commanding 65.02% stake, reflecting confidence in the company’s future prospects. Mutual funds and foreign institutions also have considerable stakes, which reinforces the stock’s appeal among institutional investors.

Top mutual fund investors include:

• Motilal Oswal Midcap Fund: 8.98%
• DSP Infrastructure Growth Fund: 2.53%

Analyst Recommendations

Out of 25 analysts, 56% recommend a Buy, 28% suggest Hold, and 16% opt for Sell. This indicates a cautiously optimistic outlook.

Should You Buy, Sell, or Hold?

Buy: Polycab has a strong growth trajectory, low debt, and expanding market presence. Long-term investors with a high-risk appetite may find it a worthwhile addition to their portfolio, especially given its potential to expand further in the FMEG and EPC segments.

Hold: If you already own Polycab shares, holding them could be a good strategy, particularly if you’re looking for long-term gains. The company is fundamentally sound, and any short-term profit dip might be temporary as the business continues to grow.

Sell: For short-term traders or those who are wary of its high P/E ratio, Polycab’s valuation might suggest that the stock is overvalued, making it a possible candidate to sell at current highs.

Conclusion

Polycab India has shown consistent growth across various business verticals, making it a solid long-term investment. However, with its high valuation, some caution is warranted for short-term traders. Depending on your investment horizon, Polycab could be a strong Buy for long-term growth or a Hold for current investors looking to ride its growth wave.