Polycab India, the undisputed leader in the wires and cables (WC) domain, has received a BUY call from Prabhudas Lilladher, underpinned by robust top-line growth, impressive margin expansion, and forward-looking corporate strategy. The stock, with a current market price (CMP) of Rs 7,440, is assigned a target price of Rs 8,808—implying substantial upside for strategic investors. The findings indicate strong demand in domestic and international segments, operational excellence driving elevated EBITDA margins, and judicious capital deployment set to nurture future growth.

Research House’s Conviction: BUY Call and Target Levels

Prabhudas Lilladher sets a BUY recommendation for Polycab India with a target price pegged at Rs 8,808, up from its CMP of Rs 7,440. - This translates to a forward PE of 40x based on FY28 estimates, reflecting heightened investor confidence in sustained earnings growth and sector outperformance.

Stellar Financial Performance: Growth Accelerators and Margins

Q2FY26 marked a 17.8% year-on-year (YoY) rise in consolidated revenues, reaching Rs 64.8 billion. - The wires & cables (WC) vertical posted a remarkable 20.9% revenue upsurge, even as cables volumes outpaced wires. - Export revenues soared by 25% YoY, now making up 6.5% of total revenue—underscoring Polycab’s global reach. - The EBITDA margin expanded by 430 basis points YoY to 15.8%, powered by astute pricing strategies and operational agility. - Profit after tax (PAT) surged 55.9% YoY to Rs 6.9 billion, while gross margins jumped 350bps to 27.1%.

Key Segmental Highlights: Driving Volumes and Portfolio Evolution

The Wires & Cables segment delivered high-teen volume growth, affirming robust demand across domestic and international markets. - Within the emerging domestic sector spectrum—data centers, EVs, aerospace, defense, and government capex—Polycab seized multiple fresh opportunities. - International operations are gaining pace: the US accounts for 20% of exports, joined by strength in Europe, Australia, and the Middle East. - The company’s FMEG (Fast-Moving Electrical Goods) segment recorded another profitable quarter, especially bolstered by the solar product line.

Strategic Expansion and Project Spring Ambitions

Polycab pursues 1.5x sector growth in WC volumes and targets an EBITDA margin band of 11-13% by FY30, under its Project Spring initiative. - Export contributions are forecasted to reach 10% of revenues by FY30, further diversifying geographical risk and revenue streams. - An annual capex of Rs 12–16 billion is slated through FY30, primarily earmarked for next-generation cables, including extra-high voltage (EHV). - The new plant, set for commissioning by Q3FY27, positions Polycab for incremental revenue from EHV sales commencing FY28.

Operational and Capital Efficiency: The Competitive Edge

Operational leverage and a favorable business mix are driving EBIT margin expansion—in Q2FY26, the WC EBIT margin rose by 270bps to 15.1%. - The EPC segment registered an EBIT margin of 18.1%, boosted by a one-off Rs 300 million gain. - Free Cash Flow is projected to escalate, with Rs 14.6 billion in FY27 to Rs 21.7 billion expected for FY28.

Financial Table: Key Metrics with Borders

Shareholding and Valuation Multiples: A Snapshot

Promoters retain a robust 62% stake, with foreign, domestic, and public institutions comprising the balance. - Stock trades at a premium: FY28E PE at 31.4x, PBV at 6.4x, and an appealing ROCE of 30.5%. Dividend yield sustains at 0.6%.

Investment Imperatives: Analyst Outlook and Risks

The equity research underscores a bullish structural story, buttressed by Polycab's focus on innovation, geographic expansion, and prudent capital stewardship. - Risk caveats include potential volatility in raw material prices (notably copper and aluminum), project execution delays, and unanticipated shifts in government capex policies.

Actionable Levels for Investors

Entry Range: Rs 7,440–7,800. Target: Rs 8,808 (12-month horizon). Stop Loss: Rs 6,950. Investment Thesis: Investors should accumulate on dips, capitalizing on Polycab's structural growth momentum and sustained profitability.
Polycab’s impressive quarterly numbers, strategic vision, and operational excellence position it as a quintessential core portfolio holding for discerning investors and institutions. The consistent upward trajectory in both topline and margins, coupled with ambitious expansion plans, reinforces the BUY stance with eyes firmly set on the Rs 8,808 level.