Polycab India: Jefferies sees no impact for Polycab on UltraTech entry into C&W segment, gives Rs 6,485 target price

Global brokerage firm Jefferies has reaffirmed its ‘buy’ rating on Polycab India but has revised its target price downwards to Rs 6,485 from the previous Rs 7,700. The brokerage firm believes that UltraTech Cement‘s recent foray into the cables and wires (C&W) segment is not expected to pose a significant threat to Polycab until at least 2027.

Additionally, the brokerage firm’s current target price still indicates an upside potential of 40% from its closing price of Rs 4,710.65 on the BSE.

Jefferies has rationalized Polycab’s target Price-to-Earnings (PE) multiple by 15%, bringing it to 32x now. This adjustment comes despite the brokerage acknowledging Polycab’s strong market leadership with a 25% share of the organized market.

The note, however, highlights potential risks for Polycab, including increased competition and a possible slowdown in demand. However, Jefferies also points to the burgeoning opportunity in exports, particularly through the China+1 strategy, which could provide a significant growth avenue for the company.

Jefferies projects a robust Compound Annual Growth Rate (CAGR) for Polycab’s sales and Profit After Tax (PAT) at 22% and 28%, respectively, over the FY25-27 period. This growth is expected to be driven by new orders and improvements in the Fast Moving Electrical Goods (FMEG) segment.

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Polycab India share price history
In the past year, the shares of Polycab have fallen by 3.13%. Since the beginning of the year (YTD), it has dropped by 36.75%. Over the last six months, the decline has been 31.36%, while in the past three months, it has decreased by 37.34%. Over the past month alone too, the price has registered a decline of 20.74%.

Around 10:15 am today, Polycab shares were trading 2.5% lower at Rs 4,593.45 on the BSE.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)