Share of Polycab Ltd Surges 3%, Shares Trading above 5,050 as Morgan Stanley has maintained an Overweight rating on Polycab with a target price of ₹7,395, reflecting confidence in the company's growth potential. The latest management roadshow highlighted key factors driving the company's performance and future outlook.
Here's What Morgan Stanley Says On Polycab:
1. Strong Demand for Cables and Wires
The demand for cables and wires is expected to accelerate in Q4, supported by higher government capital expenditure (capex). This increased investment is likely to boost infrastructure projects, thereby benefiting Polycab.
2. Inventory Re-stocking
Low inventory levels have created a need for re-stocking across distribution channels, which is expected to drive sales in the coming quarters.
3. Impact of Copper Prices
The inflationary movement of copper prices is expected to aid higher realizations for the company, ensuring better profitability despite cost fluctuations.
4. Sustained Export Momentum
Exports have remained strong, with momentum continuing into Q4, similar to Q3. This shows resilient international demand for Polycab’s products.
5. Competitive Advantage Due to US Tariffs
The Indian cables & wires (C&W) industry is likely to benefit from cost competitiveness due to US import tariffs on China and Mexico. This could provide Polycab with an edge in global markets.
6. Limited Impact of New Competition
The company anticipates limited industry impact from new competition for the next 4-5 years, indicating a strong market position and brand loyalty.
7. Margin Outlook
In the near term, margins are expected to be in the range of 12-14%, while in the long run, margins may stabilize at 11-13%.
Polycab’s strong fundamentals, demand growth, and favorable market conditions position it well for continued success. With the government’s focus on infrastructure development and supportive global trade dynamics, the company appears to be on a steady growth trajectory. Investors may find Polycab an attractive long-term opportunity, given its robust export performance, pricing power, and strong domestic demand.
Disclaimer
This article is for informational purposes only and should not be considered as investment advice. Investors are advised to conduct their own research and consult with a financial advisor before making any investment decisions. The author and the website hold no responsibility for any financial losses resulting from investments based on this article.
