Strong W&C-led growth momentum with sustained market share gains and improving demand visibility

Company profile Polycab India Limited is the largest company by revenue in the Indian electrical industry and a leading manufacturer of wires and cables with a growing presence in the fast-moving electrical goods (FMEG) segment. The company offers a wide portfolio of products including flexible wires, building wires, power cables, optical-fibre cables, communication cables, fans, lighting, switches, switchgear, conduits and solar products, catering to infrastructure, energy, manufacturing, telecom and household segments. Its EPC division undertakes turnkey power and cabling projects, promoting the use of Polycab cables in large infrastructure developments. The company operates 27 manufacturing facilities across India supported by a strong distribution network of over 4,300 dealers and more than 200,000 retail outlets. Polycab also has a growing global footprint across 80+ countries and continues to expand international distribution and certifications for its cable products.

Investment Arguments

Market Leadership in Wires & Cables Polycab is the market leader in India’s organised wires and cables industry with a market share of around 26–27%. Its scale is nearly twice that of the second-largest competitor, supported by a product portfolio of more than 9,600 SKUs serving sectors such as infrastructure, real estate, industrial manufacturing and data centres. The domestic wires and cables segment continues to benefit from strong infrastructure investment, electrification initiatives and real estate growth, which are expected to drive sustained industry demand. Polycab has consistently gained market share by expanding distribution reach, improving customer engagement and targeting underpenetrated regions, positioning the company to grow faster than industry levels over the long term.

Expanding FMEG Portfolio and Brand Presence Polycab’s FMEG segment has emerged as an important growth engine with strong product innovation and expanding distribution reach. The business has scaled rapidly since its launch and now offers a diversified product range including fans, lighting, switches, switchgear, conduits and solar products. The segment recorded strong growth supported by premiumisation, digital marketing initiatives and increased dealer additions across regions. By focusing on energy-efficient products such as BLDC fans and LED lighting, Polycab is aligning its portfolio with evolving consumer preferences while improving margins. Continued investments in brand building, product development and retail penetration are expected to strengthen its position in India’s fast-growing electrical consumer market.

Project Spring Growth Strategy Following the successful completion of Project LEAP, Polycab has launched Project Spring as its next strategic roadmap through FY2030. The programme focuses on strengthening leadership in B2B electrical solutions, accelerating B2C expansion, scaling international operations, and enhancing innovation and automation across manufacturing. Under this roadmap, the company aims to grow its wires and cables business faster than industry growth while improving operational efficiencies and margins. Project Spring also targets stronger global market penetration and increased international revenue contribution, supported by distribution partnerships, product localisation and certification approvals in global markets.

Strong Distribution and Backward Integration Polycab benefits from a well-established nationwide distribution network with over 4,300 dealers and more than 200,000 retail outlets, enabling strong market penetration across urban and rural markets. The company also maintains a high degree of backward integration in manufacturing, producing a large share of components internally. This structure ensures better control over quality, cost efficiency and supply chain reliability while enabling faster response to demand fluctuations. Combined with advanced manufacturing facilities and automation-driven processes, the company’s integrated production ecosystem strengthens margins and operational resilience.

International Expansion and EPC Opportunities Polycab continues to expand its global footprint with presence across more than 80 countries. The international business focuses on strategic partnerships, regulatory approvals and localisation of products for specific markets, particularly in North America, Europe and the Middle East. In addition, the EPC division has gained traction through government infrastructure programs such as RDSS and BharatNet, enabling the company to supply cables while executing power infrastructure projects. With rising electrification and infrastructure spending globally, these segments offer long-term growth opportunities beyond the domestic market.

Q3FY26 Financial Performance Polycab India reported strong performance in Q3FY26 with consolidated revenue reaching Rs 7,636 cr, reflecting growth of 46% YoY and 18% QoQ, driven primarily by strong execution in the wires and cables segment and continued momentum in the FMEG business. EBITDA for the quarter stood at Rs 966 cr, increasing 34% YoY, while EBITDA margin moderated to 12.7% compared with the previous quarter due to higher input costs and mix changes. Profit after tax reached Rs 630 cr, registering growth of 36% YoY with a PAT margin of 8.3%. For the first nine months of FY26, revenue crossed Rs 20,019 cr, rising 30% YoY, while EBITDA grew 47% YoY to Rs 2,844 cr with a margin of 14.2% and PAT increased 47 % YoY to Rs 1,923 cr with a margin of 9.6%. The wires and cables segment delivered robust growth with revenue rising 53% YoY to Rs 6,741 cr in Q3FY26 supported by strong domestic demand, market share gains and commodity price inflation, while EBIT stood at Rs 819 cr with margin at 12.1% following a strategic decision to defer pass-through of elevated input costs to protect demand and due to an unfavorable mix shift toward higher institutional sales and lower export contribution.The international business recorded modest growth and contributed around 6% of consolidated revenue. The FMEG segment maintained steady momentum with revenue of Rs 488 cr growing 17% YoY and Rs 1,378 cr for 9MFY26 growing 16% YoY, led by strong performance in the solar category while other product lines broadly tracked industry growth, and segment profitability improved with EBIT of Rs 14 cr in Q3FY26 and Rs 26 cr in 9M FY26 supported by scale benefits and improved product mix despite higher brand-building investments. The EPC segment recorded revenue of Rs 407 cr in Q3 FY26 growing 4% YoY while EBIT stood at Rs 27 cr with margin of 6.7%, and the company reiterated that sustainable operating margins for this business are expected to remain in the high single-digit range over the medium to long term.

Key Conference Call Takeaways

Wires and Cables Segment Performance and Margin Dynamics

• The wires and cables segment continued to deliver strong growth with segment revenue increasing 53% YoY during the quarter. Domestic wires and cables revenue grew 59% YoY supported by approximately 40 % growth in volumes according to management commentary.
• Within the product mix wires outperformed cables in revenue terms as distributors increased inventory levels amid rising copper prices while in the cables category institutional sales grew faster than channel sales, indicating strong demand from project-led infrastructure activity.
• Management indicated that the company gained further market share during the quarter although exact numbers were not disclosed as peers had not yet reported results and the gains were attributed to improved channel relationships and execution under Project Spring.
• Demand remained broad-based and was supported by both government and private sector capital expenditure, along with strong real estate activity. Government capital expenditure increased about 28.2% YoY during the first eight months of the fiscal year, reaching Rs 6.6 lakh cr and the government also announced Rs 1.25 lakh cr in loans to states for capital spending, while residential real estate launches and sales in major cities were near decade highs.
• Channel inventory in wires increased from the usual level of around 30 days to roughly 40 to 45 days, reflecting distributor pre-stocking, but management highlighted that strong secondary and tertiary demand should allow the channel to absorb the inventory during the seasonally stronger fourth quarter.

Commodity Inflation Impact and Pricing Strategy

• The company experienced significant margin pressure due to sharp increases in commodity prices and currency movements. Copper prices increased around 21% QoQ during the September to December period, while aluminium prices increased around 11% during the same period.
• Over a longer period, copper prices increased roughly 50% between January 2025 and January 2026 while aluminium prices increased around 25% and between April and December, copper rose around 35% and aluminium about 27%, including the effect of currency depreciation.
• Management explained that the company adopted a staggered price pass-through strategy instead of immediately passing the entire cost increase to customers because a sudden increase could disrupt demand and damage channel relationships. The company deliberately accepted short-term margin pressure to protect volumes, gain market share, and strengthen relationships with distributors and channel partners.
• Around 75 to 80% of the commodity price increases had already been passed through to customers during or around the quarter, and the remaining increase is expected to be implemented during the fourth quarter, with some price hikes already introduced partially in January.
• Margins were also affected by changes in sales mix as the share of institutional business increased slightly compared with the usual distribution-heavy mix of roughly 90% distribution and 10% institutional sales. Export contribution declined to around 6% compared with roughly 8.3% in the same quarter last year which also affected profitability.
• Management reiterated that profitability in the wires and cables business is managed as % margin rather than absolute margin per tonne and the long-term margin framework under Project Spring remains around 11 to 13%. Sequential margin improvement is expected during the fourth quarter as remaining price increases are implemented. Capacity utilisation in the segment remained in the early 80% range during the quarter.

International Business and FMEG Segment Developments

• International revenue grew about 5% YoY and accounted for roughly 6% of total revenue during the quarter. Growth was driven mainly by markets in the Middle East and Latin America while the United States market remained weaker due to tariff-related issues. Management indicated that the export order book remains healthy and expects growth momentum to continue once tariff issues are resolved.
• The fast moving electrical goods segment reported revenue growth of about 17% YoY and management highlighted that the company continues to outperform the industry in line with its Project Spring objective of growing at one and a half to two times the industry rate. The segment delivered profitability for the fourth consecutive quarter despite increased advertising expenditure and management reiterated a long-term margin target of 8-10% for the segment by FY30.
• The solar category was the strongest performer within FMEG as revenue more than doubled YoY driven by strong adoption of rooftop solar solutions supported by central and state government incentive schemes. Solar has already become the largest contributor within the FMEG portfolio and margins remain in the high single digit range. Management also noted strong performance from recently launched 350 kilowatt solar inverters introduced in the previous quarter.
• The fans category experienced a softer quarter as the overall industry remained largely flat or slightly negative due to weaker summer demand and channel inventory correction during October and November although some improvement was observed in December as the transition to new BEE energy efficiency norms approached. Management expects price increases of about 2-4% during the first one to one and a half months of calendar year 2026 while demand will depend significantly on the strength of the upcoming summer season.
• Advertising and promotion expenditure increased during the quarter mainly due to festive campaigns and celebrity endorsements. Even after this increase advertising spending represents around 1.5% of B2C revenue compared with the company’s medium-term objective of spending 3 to 5% of B2C revenue annually and management indicated that marketing activity is typically higher during the second half with additional spending expected in the fourth quarter ahead of the summer season.

EPC Segment Performance and Strategic Outlook

• The EPC business recorded revenue of about Rs 406.9 cr representing growth of roughly 4% YoY as execution of BharatNet orders began during the quarter. The project pipeline includes execution of approximately Rs 450 cr over the next three years along with operations and maintenance contracts worth about Rs 350 cr over ten years.
• Segment profitability was around Rs 27.2 cr with margin of about 6.7% and management reiterated that sustainable operating margins for the EPC segment are expected to remain in the high single digit range over the medium to long term.
• Management emphasized that the key operational stance during the quarter involved accepting temporary margin pressure through staggered price pass-through to protect demand and maintain strong channel relationships. The company believes that this approach helps sustain growth momentum and reinforces distributor loyalty.
• Distributor pre-stocking mainly in wires has been acknowledged but management expects inventory to normalize as strong underlying demand and seasonally strong fourth quarter sales absorb the additional stock. Export mix headwinds particularly due to the decline in export contribution and tariff issues in the United States remain an important variable to monitor although diversified geographic presence and a healthy order book support the medium-term outlook.
• Operational metrics highlighted during the call include domestic wires and cables volume growth of around 40% YoY with domestic revenue growth largely driven by wires growing about 70% and cables about 50% partly due to commodity inflation. The typical product mix of roughly 70% cables and 30% wires shifted slightly toward wires during the quarter while institutional sales increased about 200 basis points compared with the usual distribution-heavy sales mix. Export share stood around 6% compared with about 8.3% in the same quarter last year and management indicated that approximately 30% of cable demand is linked to the power transmission and distribution sector.

Key Risks & Concerns

Commodity Price Volatility Polycab’s profitability is sensitive to fluctuations in key raw materials such as copper and aluminium, which constitute a large portion of input costs in the wires and cables business. Sharp increases in commodity prices can compress margins if cost pass-through to customers is delayed or limited due to competitive pressures. In addition, supply chain disruptions in global metal markets may affect procurement costs and inventory management. Although the company mitigates these risks through price adjustments, inventory planning and supplier diversification, prolonged commodity volatility can still impact short-term earnings visibility.

Competitive Intensity in Electricals Industry The Indian electrical equipment market remains highly competitive with several large domestic and international players across wires, cables and FMEG categories. Increasing competition from organised manufacturers and low-cost regional players may pressure pricing and margins, particularly in commoditised product segments. Additionally, as Polycab expands its FMEG portfolio, it faces established consumer brands with stronger brand recall and distribution capabilities. Sustained investments in marketing, product innovation and distribution expansion will therefore be critical for maintaining market share and profitability.

Execution Risks in Expansion Plans Polycab’s long-term strategy under Project Spring involves significant capital investments in capacity expansion, technology upgrades and international market development. While these initiatives aim to capture structural growth opportunities, delays in project execution, slower demand growth or inefficiencies in scaling new operations could impact expected returns. International expansion also exposes the company to regulatory complexities, logistics challenges and geopolitical risks that could slow growth or increase operating costs.

Outlook & Valuation

India’s infrastructure expansion, rapid urbanisation and electrification initiatives are expected to drive sustained demand for electrical products across residential, commercial and industrial segments. With the wires and cables industry projected to grow faster than GDP, Polycab is well positioned to capture long-term growth opportunities through its scale, manufacturing capabilities and strong distribution network. The company’s leadership in the organised market and diversified product portfolio provide a strong foundation to benefit from these structural tailwinds.

Polycab plans to invest Rs 60–80 billion over the next five years towards capacity expansion, backward integration, digitisation and ESG initiatives. These investments are expected to support higher production volumes, improve operational efficiency and strengthen the company’s long-term competitive positioning. Alongside domestic expansion, the company aims to increase the contribution of international business and accelerate growth in the FMEG segment, creating multiple growth drivers for the business.

With strong market leadership, improving product mix, growing FMEG presence and expanding global operations, Polycab is well positioned for sustained long-term growth. Its integrated manufacturing model, strong balance sheet and strategic roadmap under Project Spring provide visibility for continued market share gains and margin stability. As infrastructure spending and electrification accelerate across India and emerging markets, Polycab’s diversified electrical solutions platform is expected to deliver steady revenue growth and long-term shareholder value creation. At CMP of Rs 7,280 the stock is currently trading at 32x FY28E, which appears attractive. Hence, we recommend a BUY rating on the stock.