- Polycab posted a 36% YoY profit jump and 46% revenue surge in Q3.
- Volume growth outpaced peers, driven by housing demand and private capex.
- Margins compressed as the firm absorbed higher commodity costs.
- Jefferies forecasts a 25% CAGR in PAT through FY28, hinging on volume and margin recovery.
- Technicals show a breakout from a six‑session downtrend, hinting at further upside.
You missed Polycab's breakout—now's the chance to act.
Why Polycab's Revenue Jump Beats the Cable Sector Trend
Polycab’s 46% year‑on‑year revenue surge far outstrips the average growth of India’s cables & wires industry, which has been hovering around 12‑15% this fiscal year. The catalyst? A confluence of private‑sector capex, a rebound in residential construction, and aggressive market‑share capture. Jefferies notes a 40% YoY volume lift in the core segment, indicating that Polycab isn’t just selling more units—it’s winning orders that previously went to rivals.
Margin Pressure Explained: Commodity Costs vs. Demand Management
While top‑line numbers dazzled, the bottom line tells a nuanced story. Copper and aluminum prices climbed sharply in Q3, yet Polycab chose to shoulder part of the cost instead of fully passing it to customers. This price‑absorption strategy protected demand amid a price‑sensitive construction market but squeezed gross margins. The result: a modest margin dip despite robust sales. For investors, the key question is whether the firm can translate volume leadership into margin expansion once commodity volatility eases.
Peer Landscape: How Tata Power and Havells React to the Same Wave
Polycab’s peers are feeling the ripple. Tata Power’s cable arm reported a 20% revenue rise, but its growth was hampered by slower capex in the power transmission segment. Havells, a major electrical goods player, posted a 15% profit increase, yet its cable division lagged behind Polycab’s velocity. The divergence highlights Polycab’s strategic focus on residential and private‑sector projects, where demand is accelerating faster than in heavy‑industry applications.
Historical Parallel: Cable Winners After a Six‑Session Slump
Looking back at Indian markets, a six‑session downtrend has often been a prelude to a breakout for sector leaders. In 2022, Finolex Industries reversed a similar slump with a 5% rally, later delivering a 30% annual profit surge. The pattern suggests that price corrections can reset market expectations, allowing fundamentally strong firms to re‑price on future growth.
Technical Snapshot: Chart Patterns and What They Signal
From a technical perspective, Polycab’s stock pierced a short‑term resistance at Rs 7,200 and formed a bullish flag on the intraday chart. The 4.15% intraday jump to Rs 7,417 represents the highest single‑day gain in the last 30 days, confirming strong buying pressure. Moving averages (50‑day crossing above 200‑day) are still a few weeks away, but the momentum indicator (RSI) sits at 62, indicating room for further upside before overbought conditions emerge.
Investor Playbook: Bull vs. Bear Scenarios
Bull Case: Continued housing demand, easing commodity prices, and Polycab’s ability to lift margins will drive earnings growth beyond the 25% CAGR forecast. A breakout above Rs 7,500 could trigger algorithmic buying, propelling the stock toward the next resistance around Rs 8,200.
Bear Case: Prolonged input‑cost pressure or a slowdown in private capex could keep margins under pressure, dampening profit momentum. A pullback below the 50‑day moving average (≈Rs 6,900) might signal a test of support, opening the door for short‑term correction.
Bottom line: Polycab’s earnings surge and volume leadership make it a compelling candidate for growth‑oriented portfolios, but investors should monitor commodity trends and margin trajectories before scaling positions.