Polycab Stock Analysis: Shares Crash 20% on UltraTech Entry – Growth Prospects
Business and Industry Overview:
Polycab India is a big electrical company based in Mumbai that makes and sells wires, cables, fans, lights, switches, solar products, and more. It is India’s largest wire and cable maker and also sells in 78 countries. It makes products for homes and industries, including uPVC conduits, lugs, and glands. Polycab earns most of its money from wires and cables (81%), followed by home electrical products (8%) and big projects (11%). It sells 95% in India and 5% in other countries, mainly North America, the Middle East, Australia, and Europe. It has 28 factories across India and plans to spend ₹1000-1100 crore every year in 2025 and 2026 to grow its business. Polycab wants to earn ₹20,000 crore by 2026 under Project Leap. It has a huge seller network with 3800+ distributors, 2,05,000+ shops, 29 warehouses, and many offices. In 2023, it merged with Silvan Innovation Labs, and in December 2023, the Income Tax Department checked some offices and employees’ homes. In May 2024, Ashish Kakkar became the HR Head, and Polycab changed its logo and tagline to “Ideas Connected”. The company keeps growing, making new products, and expanding in India and globally.
India makes a lot of electricity and uses a lot, too. As of April 2024, India is the third-biggest country in the world for electricity with 442.85 gigawatts (GW). More people in India means they need more power. In 2023, power use grew by 9.5%, which is 1,503.65 billion units. India wants to make more clean energy and plans to have 500,000 megawatts by 2032. The government is spending 50% more money on green energy like solar power and hydrogen in 2024. They will change some power plants to use clean energy instead of coal by 2026. The government has a big plan that costs about 109.50 billion dollars to improve the power system and make sure everyone has enough electricity by 2032. They also want to put solar panels on the roofs of one crore homes. India expects to spend about 205.31 billion dollars on energy projects in the next 5 to 7 years. By 2022, they want to have 350 GW of power, up from 243 GW in 2014. The electrical equipment market will grow from 24 billion dollars in 2013 to 100 billion dollars by 2022. India is making it easier for foreign companies to help build power plants. This will create jobs and bring in money. With these plans, India is ready to lead in clean energy and electricity.Polycab is the largest player in the Indian wires & cables industry with an overall market share of 12%. Within the organized wires & cables industry, Polycab has a market share of 18-20%.
Latest Stock News:
On February 27, the stock prices of Polycab and other companies that make wires and cables went down a lot. Polycab and RR Kabel lost 19% of their value, while KEI Industries fell by 21%. Havells India and Finolex Cables went down by 6% each. Together, these companies lost more than ₹33,000 crore, which is almost $4 billion. This happened because UltraTech Cement, the biggest cement company in India, said it will start making wires and cables. They plan to spend ₹1,800 crore over two years for this. People worried that UltraTech would compete with Polycab and Havells. The wires and cables market in India is growing, making 13% more money each year from 2019 to 2024. UltraTech might get materials like copper and aluminum easily from its other companies. Some experts think the drop in UltraTech’s stock is a good chance to buy. After the news, UltraTech’s stock also went down by over 5%.
Potentials:
Polycab India has big plans to grow in the future. They will grow steadily because many people need wires, cables, and fast-moving electrical goods. Polycab is going to sell more in small towns and villages and also wants to sell in other countries. The company is well-known and trusted by people, which helps them reach more customers. The government is helping the power sector with incentives, which will also help Polycab. There is a lot of building happening in India, so people will need more electrical products. Polycab is also getting into renewable energy projects, which are important for the future. They want to grow 1.5 times faster than other companies in the wires and cables business over the next five years. In the fast-moving electrical goods sector, they plan to grow twice as fast as other companies. Polycab expects to grow by 27% every year until 2030. Polycab India has shown strong returns over different periods, which means it has good chances for long-term investors. Overall, Polycab India is ready to grow and succeed in the coming years.
Analyst Insights:
- Market capitalisation: ₹ 70,391 Cr.
- Current Price: ₹ 4,674
- 52-Week High/Low:₹ 7,607 / 4,635
- P/E Ratio: 38.3
- Dividend Yield: 0.64 %
- Return on Capital Employed (ROCE):31.3 %
- Return on Equity (ROE): 23.2 %
Polycab India is a good company to buy shares in. Right now, the company is worth ₹70,391 crore, and its stock price is ₹4,674. The highest price it reached in the last year was ₹7,607, and the lowest was ₹4,635. The company makes good money and has grown by 28.1% every year for the last five years. It is almost free of debt, which means it doesn’t owe much money. Polycab gives some of its profits back to shareholders as a dividend, and it pays 0.64% of its profits. The company has strong returns, with 31.3% return on capital and 23.2% return on equity. Even though the people who own the company have sold some of their shares, it is still doing well. The stock is trading at a lower price now, so it could go up again. Overall, Polycab India is a good choice for people who want to buy stocks and hold them for a while.