Since the lows of the covid-19 outbreak-induced crash in March 2020, the stock has delivered a compound annual growth rate (CAGR) of about 40%. The share price went up more than 12 times before the recent correction over the last few months.
Investors were extremely bullish on the stock all the way till the start of this year, when the market correction began to take its toll.
The stock fell from an all-time high just above ₹7,600 in December 2024 to around ₹4,550 in late February 2025. This was a 40% correction in a little over two months.
While the stock has recovered to nearly ₹6,000, it’s safe to say that sentiment has taken a hit.
Polycab India share price—5 years
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But what is the outlook today?
In this editorial, we will discuss the pros and cons of investing in the stock of Polycab India.
Pros
Well-established business
Polycab India is one of India’s leading manufacturers of cables and wires. The company has a wide portfolio of cables, wires, and allied products, such as uPVC conduits, lugs, and glands.
It offers a varied range of wires and cables for retail and industrial use, catering to diverse industries. It is also one of the largest exporters of cables in India.
Recently, it also entered into consumer electrical products like fans, switches, switchgear, LED lights, luminaries, solar inverters, and pumps.
The company has a market share of 26-27% (FY25) in domestic organised wires and cables business and has presence in over 76 countries. It derives 89% of revenues from wires and cables segment, 9% from fast-moving electrical goods, and the balance 2% from other businesses.
It has 25 manufacturing facilities and a network of over 4,300 distributors, around 200,000 retail outlets, 23 warehouses, four regional offices, nine local offices, and 17 experience centres in India.
Polycab has also expanded its presence to 76+ countries. Out of the exports, 46% are to North America and 20% to Europe. The company derives about 10% of its revenues from exports.
The financial performance of the company from 2020 to 2024 was good. Sales increased at a CAGR of 17.7%, and net profits increased at a CAGR of 29.2%.
The RoE and RoCE have averaged at 16% and 25.5%, respectively.
In FY25, Polycab India reported its highest-ever net profit of ₹2,050 crore, up 13% YoY. Full year revenues rose by 24% YoY to ₹22,000 crore.
The management has declared that Polycab is now the largest Indian company in the electrical industry by revenue and the most profitable company in the electrical industry for the third consecutive year.
The company also has an almost pristine balance sheet. The total debt is near zero compared to its cash equivalents of ₹2,460 crore at the end of FY25.
It primarily relies on cash generated from operating activities to fulfil its working capital and capital expenditure requirements.
Good long-term growth prospects
The Indian cables and wires industry is set for a period of rapid expansion, fuelled by the rising demand for infrastructure, urbanization, and electrification.
The sector, valued at approximately ₹1.8 trillion in FY23, is projected to grow at a CAGR of 12-14% between FY23 and FY27.
The increasing adoption of modern electrical systems, smart grids, and renewable energy sources are drivers of demand for high-quality cables.
Government initiatives such as production-linked incentives (PLI), Make in India, and domestic manufacturing incentives are accelerating this shift.
Organised players, with better financial and operational capabilities, are benefiting from this transition, leading to a consolidation of market share among larger companies.
Companies are also exploring new opportunities in high-voltage direct current (HVDC) and deep-sea cables, which are critical for efficient power transmission and offshore wind energy projects.
Additionally, the rising adoption of electric vehicles (EVs) has created a new demand segment for specialised cables used in EV charging infrastructure.
Global demand for high-quality, cost-competitive cables has allowed Indian manufacturers to expand their international footprint, too.
To capitalise on all these opportunities across different sectors, Polycab India is transitioning to a vertical-focused structure.
Going ahead, the company’s management expects the demand momentum to remain strong in the wires and cables business. It has planned a capex of ₹700 crore each year for the next two years.
Of this, three-fourths will be allocated towards the cables and wire business for setting up a high-voltage manufacturing plant. The rest of the capex will be for the consumer electricals business, maintenance, and debottlenecking.
The management has planned to fund the entire capex through internal accruals as the company has adequate liquidity for the same.
However, over the long term, over the next five years, the anticipated capex will be between ₹6,000 crore and 8,000 crore. Thus, the company might use some debt to fund it.
The management anticipates the FMEG business will become profitable, which will add to the company’s overall profitability.
Cons
UltraTech’s entry
UltraTech Cement, a dominant force in India’s cement market, is making a bold move to expand its footprint in the construction value chain by entering the wires and cables sector. The company has committed an investment of ₹1,800 crore to establish its presence.
The project is expected to be commissioned by December 2026, marking UltraTech’s transition from a cement firm to a multi-segment construction solutions provider.
UltraTech’s entry introduces a powerful new competitor backed by significant financial resources and an extensive distribution network. It will disrupt the industry’s competitive balance, as UltraTech leverages its scale, supply chain efficiency, and brand strength to gain a foothold in the market.
As part of the Aditya Birla Group, the company can access key inputs like copper and aluminium from its sister company, Hindalco.
This gives UltraTech a cost edge over existing players, who rely on external suppliers and are vulnerable to price fluctuations in global metal markets. Securing raw materials at lower costs could enable UltraTech to offer aggressive pricing, potentially putting pressure on the profit margins of incumbents.
The company’s vast dealer and distributor network, which has played a crucial role in its cement business, could also accelerate its market penetration in the wires and cables segment.
With a strong presence across urban and rural India, it may be able to integrate its new offerings into existing sales channels, giving it an advantage in terms of reach and distribution efficiency.
Tariff overhang
US President Donald Trump has announced reciprocal tariffs on almost every country. India’s tariff rate was 26%.
Now the tariffs have been paused to allow for negotiations. But the announcement itself was enough to hurt investor sentiment.
One of the largest impacts, sector-wise, if the potential tariffs will be felt by the electrical and electronics manufacturing companies.
Polycab India is one of the prominent exporters of electrical equipment to the US. Even though the share of revenue from the US market is in the single digits, this is an overhang on the stock until clarity emerges on the tariff front.
Investors should evaluate the company’s fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.
Happy Investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
