Polycab India has received a maintained BUY rating from Motilal Oswal with a target price of ₹9,600, despite facing margin pressures from rising raw material costs. The brokerage's recommendation is based on 40x FY28E EPS valuation.

Strong Revenue Performance Amid Cost Challenges

Polycab India delivered robust financial performance in Q3FY26, with revenue growth reaching approximately 46% year-on-year. The growth was primarily driven by the cables & wires segment, which expanded by approximately 54% during the quarter.

Margin Pressure from Raw Material Inflation

Despite strong top-line growth, the company faced margin compression due to steep raw material cost inflation. The adjusted operating profit margin stood at 12.90%, declining by 85 basis points year-on-year and falling 160 basis points below estimates. This margin impact was partly attributed to approximately 25 basis points of employee cost provisioning.

Advertising and promotional spending as a percentage of revenue increased by 50 basis points year-on-year and 70 basis points quarter-on-quarter, reflecting the company's continued investment in brand building and market expansion.

Financial Performance Metrics

The company's adjusted EBITDA reached ₹9.90 billion, representing 37% year-on-year growth and meeting analyst estimates. Adjusted profit after tax stood at ₹6.50 billion, marking 42% year-on-year growth and aligning with projections.

Liquidity Position Outlook

Motilal Oswal expects Polycab India's liquidity position to further improve, with estimated net cash projected to reach ₹29.80 billion in FY28E compared to ₹30.30 billion as of December 2025. This strong cash position is expected to support the company's growth initiatives and operational flexibility.

The brokerage maintains its positive outlook on the company despite near-term margin pressures, citing the strong revenue momentum and robust market position in the cables and wires segment.

Polycab India has received a buy rating from Prabhudas Lilladher with a revised target price of ₹9,744, reflecting the brokerage's confidence in the company's strong operational performance and growth prospects. The target represents a marginal revision from the earlier price of ₹9,781.

Strong Wires & Cables Segment Performance

The company's Wires & Cables (W&C) segment demonstrated robust growth momentum with domestic volume growth of approximately 40%, accompanied by realization improvement. The domestic W&C business recorded impressive year-on-year growth of 59%, driven by strong performance across product categories.

The exceptional wires growth was attributed to a low base effect, channel restocking amid elevated copper prices, and market share gains. W&C capacity utilization reached early 80% in Q3FY26, while the international business contributed 6.0% to total revenue with 5% YoY growth.

FMEG Segment Delivers Positive Results

The Fast Moving Electrical Goods (FMEG) segment continued its positive trajectory, delivering another quarter of positive EBIT margin at 2.9%. This performance was primarily led by solar products, which registered 2x growth and are expected to maintain faster growth in the coming years.

Margin Pressures and Recovery Outlook

EBITA margins faced temporary pressure due to high advertising and promotional expenses and one-off costs related to gratuity provisioning following the implementation of new labor codes. However, the company expects margins to normalize and return to the guided trajectory under Project Spring in the upcoming quarter.

Financial Projections and Valuation

Prabhudas Lilladher projects strong financial performance for Polycab India over the forecast period FY26-28E. The brokerage expects sustained growth across key financial metrics, supported by the company's strategic initiatives and market positioning.

The target price of ₹9,744 is based on Sum of the Parts (SOTP) valuation methodology, implying a price-to-earnings ratio of 40x FY28E. This valuation reflects the brokerage's confidence in the company's ability to execute its Project Spring strategy and achieve targeted margins of 8-10% EBITDA in the FMEG segment by FY30.