Polycab hosted a conference call
on Jan 23, 2025. In the conference call the company was represented by Inder T.
Jaisinghani , CMD and Gandharv Tongia, ED & CFO.
Keytakeaways of the call
Demand environment continues to
be strong. General Elections has slowed down the government spending for the
last few quarters but with vision of Vikshit Bharat by 2047, the spending are
to pickup going forward. The demand is expected to pickup in coming quarters.
The company expects to grow its
domestic C&W business by 1.5 times of the growth rate of the Indian C&W
industry, which is expected to grow at 1.5 times of real GDP growth of the
company. The company expects the EBITDA margin of about 11-13%, which is more
sustainable over long term.
The company expects its FMEG
business to grow at 2 times of the industry growth.
In Q3FY25, volume growth
cables was in double digit and that of
wires in single digit and the volume growth of C&W together is early double
digit.
Having achieved its target
revenue of Rs 200 billion under Project Lead, the company has launched Project
Spring for next 5 years. Over the next 5 year the company will lay the
foundation for multi decade growth under this ‘Project Spring’. Six
pillars of ‘Project Spring’ are: solidifying Market Leadership in B2B;
Propelling B2C Expansion; Ramp-Up International Business; Innovation &
Automation - Led Holistic Development; Nurture Talent & Capabilities;
Growing ESG Integration.
Looks to evolve into an electrical
solutions supplier for the customers in B2B marketplace.
Export demand is very large.
Expect export growth rate is to be faster than domestic growth rate. Expect
exports to account for 10% of the revenue.
International order book strong
and expect to sustain the growth momentum of Q3 in Q4fy25 as well. The company
has expanded its market presence to 81 countries.
Inventory position at retail
channel: Started Q3FY25 with a higher inventory. Wire offtake was lower in
Q3FY25. The copper price fell by 9% during this quarter. Now channel inventory
is normal and wire offtake is expected to be normal in Q4FY25.
Next few fiscal the company
expect the growth momentum of 9mFY25 to sustain for wires.
Expansion of capacity is for all
products across the board in C&W and moreover the capacity will be fungible
in nature offering flexibility to change product mix depending on demand. Capex
in EHV plant is roughly about Rs 6-7 bln and the plant will be commissioned by
FY26. Every year the company will incur a capex of about 10-12 billion.
Indian cables export to US
attracts 3-5% duty against 0% from
Mexico. So any duty on Mexico exports will be good for India.
|