InvestorQ : What is your take on the results announced by Polycab for the Sep-20 quarter?
vaishnavi mhatre made post

What is your take on the results announced by Polycab for the Sep-20 quarter?

vidhya Laxmi answered.
8 months ago

Polycab is emerging as a competitive player in the electrical goods space. It has almost taken over where Havells appeared to have got saturated in the market. Since its IPO, the stock has been one of the star performers in the market.

For the Sep-20 quarter, Polycab India reported 5.72% lower top line sales at Rs.2,113.68 core. For the second quarter, the operating profits were smartly higher by 14.94% at Rs.266.87 crore while net profits were up by 14.32% at Rs.221.55 crore on the back of improvement in volumes and pricing power.

This also had a favorable impact on the margins of the company. For example, the operating profit margins or OPM of Polycab broadened by 227 basis points at 12.63% while net profit margins or NPM as it is popularly called also expanded by 184 bps at 10.48% in the Sep-20 quarter. This expansion was on the back of sharply lower input costs.

Polycab sales were substantially impacted by the COVID-19 impact. The net profit in the current quarter may appear to have grown in a timid manner but that is more due to the base effect as there was a huge deferred tax write-back in the sequential June quarter.

For Polycab, the high margin wires and cables business continued to be the mainstay of the business accounting for 80% of the total revenues in the Sep-20 quarter. For the quarter, the company also saw higher operating cash flows due to favourable movement in working capital flows.