News

• Income Tax department raided Polycab India on 22nd December 2024
• Income tax department detects 1000 Crore unaccounted cash sales in Polycab India
• Unaccounted cash of more than Rs 4 crore was seized
• More than 25 bank lockers were put on restraint

Impact of News

• Polycab India tumbles more than 30% due to this news
• Share tumbles from 5619 to 3810, on Jan 11 2024 polycab made its new low in 1 year

Should you invest in such companies ?

• As per the Warren Buffet ” The best things that happens to us is when a great company gets into temporary trouble, We want to buy them when they are on the operating table”
• Keeping this thing in mind we can always look out for such companies which are trading at a discounted price
• One can also argue that there are certain examples where such bad news (Fraud) happens it impacts the company in the long run , companies such as Yes Bank, Punjab National Bank, Paytm, Suzlon Energy , etc
• In these companies 1 thing was common all these companies management issue & the shareholding pattern of the promoters had issues
• But when it comes to the Polycab India, there was no any serious management issues but 1 thing that can be said is that Balance sheet of Polycab India is really strong so it impacted the company in the short term.

About Company

• Polycab is India’s leading manufacturers of cables and wires.
• Polycab has also launched a wide range of consumer electrical products like Fans, Switches, Switchgear, LED lights and Luminaries, Solar Inverters, and Pumps
• In wire & cable segment Polycab India has 23% market share in India.
• Company has 25 manufacturing sites
• Company has a strong presence pan India with 4300+ distributors, 205,000+ Retail Outlets, 23 Warehouses and depots, 4 Regional offices, 9 Local offices and 17 Experience centres.

Revenue Mix

Polycab India has 3 revenue sources

1. Wires & Cables– company manufactures wires and cables for retail and industrial use, catering to a diverse customer base across a wide range of industries.
2. FMEG: commenced in FY14, is a high-growth segment. It features a growing product mix across different price points that caters to the complete spectrum of customers
3. Other- Mainly EPC business.

• Product wise Breakup-

• Location wise breakup

 

• Distribution Channel

Key Ratios

Market Cap	₹ 96,844 Cr.
Current Price	₹ 6,446
High/Low	₹ 6,456 / 3,295
Stock PE	54.3
Sector PE	34
ROCE	32.3 %
ROE	24.1 %
PEG Ratio	1.87
Debt To Equity	0.02

Shareholding Pattern

Change In Shareholding Pattern

	Jun-21	Mar-24	Change
Promoters +	68.40%	65.24%	-3.16%
FIIs +	6.51%	11.96%	5.45%
DIIs +	8.80%	7.23%	-1.57%
Public +	16.29%	15.58%	-0.71%

1. Promoters: Promoters’ ownership has decreased from 68.40% in June 2021 to 65.24% in March 2024, indicating a decrease of 3.16%. This might suggest that promoters have either divested some of their shares or that new shares have been issued, diluting their ownership.
2. FIIs (Foreign Institutional Investors): FIIs’ ownership has increased from 6.51% in June 2021 to 11.96% in March 2024, indicating a significant increase of 5.45%. This suggests that foreign institutional investors have increased their stake in the market, possibly due to improved market conditions or attractive investment opportunities.
3. DIIs (Domestic Institutional Investors): DIIs’ ownership has decreased from 8.80% in June 2021 to 7.23% in March 2024, indicating a decrease of 1.57%. This implies that domestic institutional investors have reduced their stake in the market over this period, possibly reallocating their investments to other assets or sectors.
4. Public: Public ownership has decreased from 16.29% in June 2021 to 15.58% in March 2024, indicating a decrease of 0.71%. This suggests that individual retail investors have slightly reduced their ownership in the market, possibly due to various factors such as market volatility or individual investment decisions.

Financial Trend

Sales:

• March 2020 Sales: ₹8,330
• March 2024 Sales: ₹18,039
• Sales: Increased by approximately 104%.

Net Profit:

• March 2020 Net Profit: ₹759
• March 2024 Net Profit: ₹1,784
• Net Profit: Increased by approximately 135%.

Company Valuation

Share Price (70% up)

• Polycab India tumbles 30% on Income Tax Fraud ( This was the best opportunity to invest in this company)
• From 3810 level when the raid happened, share price has grown by 70% to 6430 level.

Share Price (5 years)

• In last 5 years, company has given 881%
• If one has invested 1Lakh in 2019, it would have became 9.91 Lakhs.

Median Price to Earning Ratio

• Current PE- 54.3
• Median PE- 36.2
• As per the Median PE, company is overvalued

 

What Should Investors Do ?

• As the company’s Sales & Net Profit have been continuously increasing
• Polycab India is fundamentally strong company
• As of now, Median PE is lower than Current PE, so company is overvalued
• This is not the right time to invest in this company
• When the Current PE is less than or equal to Median PE then will be the right time to invest
• As of now, investors can stay away from this company, if you are thinking of the long term then you can invest small chunk of money

Check this out- Fundamental Analysis of Sula Vineyards Ltd.

Disclaimer

• This article is a complete guide about Polycab India Ltd.
• These information and forecasts are based on our analysis, research, company fundamentals and history, experiences, and various technical analyses.
• Also, We have talked in detail about the share’s future prospects and growth potential.
• Hopefully, this information will help you in your further investment.
• If you have any further queries, please comment below. We will be happy to answer all your questions.
• If you like this information, share the article with as many people as possible