POLYCAB Q1 FY26 earnings call.
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Revenue
₹5,906 Cr
verified against source
Revenue YoY
26%
reported change
EBITDA
Pending
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What the record says.
Polycab India delivered a strong Q1 FY26 with highest-ever Q1 revenue and profitability, driven by robust 26% YoY consolidated revenue growth and 47% EBITDA growth. The wires and cables segment outperformed with 31% YoY revenue growth and over 25% volume growth, supported by government infrastructure spending and favorable commodity trends. EBITDA margin expanded 210bps to 14.5% through strategic pricing actions, operational efficiency, and favorable business mix. The FMEG segment achieved 18% growth with its second consecutive profitable quarter, led by solar products recording 2X growth. EPC revenues declined 19% YoY but the order book remains healthy at ₹80 billion (BharatNet) plus ₹38-40 billion (RDSS). Market share in organized cables and wires reached 26-27% in FY25. The company maintains its FY30 guidance of 11-13% EBITDA margins for C&W and 8-10% for FMEG, with annual capex guidance of ₹1,200-1,600 crore. Key risks include tariff volatility in export markets (particularly US at 10% duties), potential capacity additions by competitors, and moderating real estate demand in top cities.
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Guidance to track
- Long-term margin guidance for cables and wires business factoring in capacity expansion costs, increasing A&P spend (3-5% of B2C top line), export mix benefits, and wires mix dynamics.
- Target margin expansion for FMEG business as it scales, driven by premiumization strategy and operating leverage from growth of 1.5-2X industry rate.
- Guidance of ₹6,000-8,000 crore capex over five years, largely for cables and wires capacity expansion with some for backward integration. Q1 FY26 spend was ₹410 crore.
- Target to grow FMEG business at 1.5-2X of industry growth (industry currently at 8-10%), with expectation of double-digit industry growth from next year as real estate demand continues.
Risks flagged
- Analyst raised concerns about US tariffs given Polycab exports ~33% of international sales to the US. While India currently at 10% duty vs China's 55%, Mexico's 30% effective Aug 1, this remains an evolving situation affecting near-term export visibility.
- Analyst questioned whether Chinese players are dumping in markets like Australia where China has zero tariff agreement. CFO acknowledged Australia is a geography where Chinese competition on pricing exists, though other markets (Europe, Middle East) show less dumping behavior.
- Company clocked 14.7% C&W EBITDA margins in Q1 vs long-term guidance of 11-13%. Analyst directly questioned why management doesn't reset guidance higher given consistent outperformance. CFO attributed current margins to favorable commodity direction, mix, and scale benefits, while citing capacity expansion costs and higher A&P spend as headwinds to sustained higher margins.
- EPC revenues declined 19% YoY to ₹3,474 million with 7.7% margin. CFO explained quarterly variations due to different project execution phases (material supply vs installation), though annual margins expected in high single digits. Revenue contribution to remain in 5-10% range.
Key quotes
- We don't give near-term to yearly guidance. Our guidance is for the longer term. It is more like five-year guidance. And that is where we've given an 11% - 13% of a better margin in the cables and wires business as our guidance.
- While capacity will come up for the industry, that advantage will help us. Over and above that, the kind of investments and growth that we are witnessing from various bank sectors, that also helps in absorbing the new capacity which are coming up from other players.
- The government rooftop solar scheme is there, and yet, I think only 20% of that has taken off. Until those schemes continue, at least next few years, we are expecting continuous demand for the solar inverters.
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