Dolat Capital: Polycab India - Stage Set For Scale Benefit And Operating Leverage
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Dolat Capital Report
Polycab India Ltd. is an established player in the wires and cables business with more than five decades of experience and is a market leader with more than 12% share.
Polycab has been improving its mix over the last few years from a relatively commoditised cable and wire business to making inroads in the FMEG (Fast Moving Electrical Goods) segment, which currently contributes 9.4% to the revenue mix.
Over the last four years, its cable business has grown at a approximately 9% compound annual growth rate while the FMEG business has grown at approximately 43% CAGR though from a low base, resulting in a profit CAGR of 37% over the same period.
It has backward integrated to manufacturing copper rods, which helps it have control over quality and timing of manufacturing. It targets to grow the FMEG business majorly though inhouse manufacturing and expanding distribution.
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