Buy This Multibagger Bluechip Stock, Cash On Books Doubled To Rs. 4.9 Bn: Top Brokerage

Leading brokerage firm Keynote has given a buy rating to the stock of Polycab India Ltd (PIL). Cash on books since Q2 FY22 has doubled from Rs. 2.4 Bn to Rs. 4.9 Bn due to improved working capital and commodity price softness. The Company plans to incur a Capex of Rs. 4 Bn in FY23, of which 2/3rd will be utilized for C&W and 1/3rd for FMEG.

Stock To Buy: Target Price

The Current Market Price (CMP) of Polycab India Ltd (PIL) is around Rs. 2,648. Keynote has estimated a Target Price for the stock at Rs. 3,063. This stock has the potential to give a 16% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 41,198 crore. The company gained by 326.58% in the last 5 years.

Stock Outlook
Current Market Price (CMP)	Rs. 2,648
Target Price	Rs. 3,063
Potential Upside	16.00%
52-week high share price	Rs. 2,862.50
52-week low share price	Rs. 2,043.85

Decent growth momentum

In Q2 FY23, Polycab India Ltd. (PIL), registered decent growth on a high base, along with strong improvement in margins. The Company clocked a 10% revenue growth on a YoY basis, led by Cable & Wire (C&W) segment. Performance from the Fast Moving Electrical Goods (FMEG) segment was lacklustre owing to a weak demand environment and reorganization of the distribution channel in the segment.

Stock Upside

According to Keynote, "We believe that the C&W division of PIL will continue its decent performance in H2 FY23 and FY24E on the back of superior domestic and export demand with steady margins. Improved working capital which was seen in this quarter, is also expected to remain steady over the mid to long-term. We believe that PIL's strong performance on growth and margins will continue in H2 FY23 and FY24E. Based on the above expectations and normalized performance from the FMEG segment, we maintain our view on PIL with a Buy rating and a target price of Rs. 3,063."

Company Portfolio

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, we manufacture and sell FMEG products such as electric fans, LED lighting and luminaires, switches and switchgear, solar products and conduits & accessories. Our promoters collectively have more than four decades of experience among them. Our Company was incorporated as 'Polycab Wires Private Limited' on January 10, 1996 at Mumbai as a private limited company under the Companies Act, 1956.

Disclaimer

The above stock was picked from the brokerage report of Keynote. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.