Subscribe to Polycab India: ICICI Direct

April 11
09:33 2019

Polycab India (PIL) is engaged in the business of wire & cable and fast moving electrical goods (FMEG) under the “Polycab” brand. With value market share of ~18% in organised industry, PIL is the largest manufacturer in the wires & cables industry in India. PIL has developed a strong distribution network of dealers and distributors across India. These dealers and distributors serve more than 100,000 retail outlets. PIL has recorded revenue, earnings CAGR of ~14%, ~42%, respectively, in FY16-18 led by higher EBITDA margin. We believe organic growth in core business coupled with lower interest outgo (owing to loan repayment through proceeds from fresh issue) would drive profitability of the business, going forward.

Valuation and Outlook

At the IPO price band of | 533-538, the stock is available at a price to earnings multiple of 22x FY18 EPS. We believe the issue is available at attractive valuation, considering its leadership position in the wire & cable industry, low debt/equity (~0.3x) and attractive return ratios (RoCE ~21%, RoE ~16%). We recommend SUBSCRIBE to the issue at the offer price.

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