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Anand Rathi Report
Polycab India Ltd.’s weak Q1 was operationally in line with our estimates. Business to customer B2C/tier 1-2 markets did better than business to business B2B/metros. Revenue/Ebitda/profit before tax (PBT)/profit after tax (PAT) fell 50%/74%/80%/13% YoY because of all segments. Lower revenues impacted Ebitda margin (5.9% versus 12.9% in FY20). Tax write-back related items (Rs 1 billion) and a Rs 97 million gain on the Rayker consolidation helped a lesser PAT decline. Otherwise, adjusted PAT came in at a meagre 75 million (down 94% YoY). Despite this, net cash improved to Rs 2.1 billion after the release of WC since April.
While FY21 will be tough, strategic steps to improve working capital and cost optimisation will offer long-run benefits. We remain positive on Polycab, given its leadership in the fast-growing cable and wire (C&W) including exports, wide distribution network, strong management and healthy balance sheet.
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