BoB Capital Sees Upside In FMEG Stock, Recommends Buy For Higher Return

BoB Capital has assigned buy call to mid-cap consumer durables sector stock, Polycab India Ltd with a target price of Rs 3300 apiece. According to the brokerage, "Upbeat performance in wires & cables aided Q3 topline growth of 10% YoY despite a higher base." If you buy Polycab India shares now, you will potentially receive 20% return. Check details below:

1. Polycab India Ltd Stock Performance & Return

The last trading price of the stock is Rs 2760.60 apiece with 52-week high at Rs 3,025.00 and 52-week low at Rs 2045.00 apiece, respectively. The company has a market capitalisation of Rs 41,328.04 crore. The stock has 4% return in last 3-months, 3% in last 1-year, and 144% in last 3-years.

2. Resilient Performance

According to the analyst, "Polycab's Q3FY23 results beat our estimates on all fronts led by an upbeat performance in the wires and cables (W&C) division. The company's topline grew 10% YoY to Rs 37.2bn (Rs 36bn est.), clocking a 3Y CAGR of 14.1%, amidst recent commodity deflation and a higher base. EBITDA margin improved to 13.6% (+280bps YoY) on stronger operating leverage, and adj. PAT rose 46% YoY to Rs 3.6bn (Rs 2.9bn est.) on a lower base and buoyant sales."

3. Valuation

According to BoB Capital, "Weakness in the FMEG business and a volatile commodity environment remain challenges in the near term, but a resilient performance in W&C is auguring well for the company. We remain positive on Polycab given its leadership position in the core W&C business and a growing FMEG segment that has structural growth opportunities from infrastructure development. We alter our FY23/FY24 EPS estimates by +6%/-5% to bake in the Q3 print. On rolling valuations over to Dec'24E, our TP remains at Rs 3,300, based on an unchanged 35x P/E. BUY."

4. About Polycab India

Polycab is engaged in the business of manufacturing and selling wires and cables and fast-moving electrical goods ‘FMEG' under the ‘POLYCAB' brand. Apart from wires and cables, it manufactures and sells FMEG products such as electric fans, LED lighting and luminaires, switches and switchgear, solar products and conduits & accessories, according to its official website.

Disclaimer

The stock has been picked from the brokerage report of BoB Capital. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.