Polycab India Ltd (BOM:542652) Q4 FY25 Earnings Call Highlights: Record Revenue and Robust ...

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Thu, May 8, 2025, 1:02 AM 5 min read

Full Year Revenue: Crossed INR220 billion, marking Polycab as the largest company in the electrical industry by revenue.
Quarterly Revenue Growth: 25% year-on-year increase for Q4 FY25.
EBITDA Growth: 35% year-on-year increase, with a margin improvement of 110 basis points to 14.7% for the quarter.
Quarterly PAT: INR7.3 billion, a 33% year-on-year growth, with PAT margins improving by 60 basis points to 10.5%.
Net Cash Position: INR24.6 billion.
Working Capital Cycle: Improved to 49 days in Q4 FY25.
CapEx for FY25: INR9.6 billion.
Wires and Cables Revenue Growth: 22% year-on-year for the quarter, with domestic business growing 27%.
FMEG Business Growth: 33% year-on-year for the quarter, with profitability achieved in Q4 FY25.
EPC Business Revenue: INR6,028 million for Q4, marking a 47% year-on-year growth.
Dividend Proposal: INR35 per share, with a payout ratio of 26.3%.

Warning! GuruFocus has detected 3 Warning Signs with BOM:542652.

Release Date: May 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Polycab India Ltd (BOM:542652) achieved record-breaking revenue in FY25, crossing INR220 billion, making it the largest company in the electrical industry by revenue.
The company reported a strong 25% year-on-year growth in consolidated revenue for Q4 FY25, with robust performance across all business segments.
EBITDA grew by 35% year-on-year, resulting in a 110 basis points improvement in EBITDA margin, reaching 14.7% for the quarter.
The Wires and Cables segment delivered 22% year-on-year growth, with domestic business recording an impressive 27% growth.
The FMEG business turned profitable in Q4 FY25, marking a significant milestone after 10 quarters of strategic investments.

Negative Points

Global trade tensions and policy uncertainty have led to a downward revision of global growth projections by the IMF.
The international business witnessed a temporary dip due to the rollover of a large order into the next quarter.
The company faces challenges from rising trade barriers and tariffs, particularly affecting the U.S. market.
Despite strong domestic growth, the export business underperformed due to a business model transition in the U.S.
The delayed onset of summer impacted the sales of fans, a key product in the FMEG segment.

Q & A Highlights

Q: Could you quantify the volume and value growth in the domestic cable and wire segment, which grew at 27% year on year? A: The volume growth within the domestic cables and wires for the quarter year on year was around mid-teens, with the remaining growth coming from value. Cables grew faster than wires, with cables in the higher teens range and wires in high single digits. - Chirayu Upadhyaya, Head - Investor Relations

Q: What has been the volume growth trend for the last couple of years in the domestic market for cables and wires? A: For FY25, the volume growth for cables and wires was in the mid-teens, with cables growing higher and wires in high single digits. This aligns with our guidance of growing 1.5 to 2 times the real GDP growth. We have gained market share, now at 26% to 27% in the domestic organized market. - Chirayu Upadhyaya, Head - Investor Relations

Q: How do you view the export revenue shaping up for FY26 given the challenges in the U.S. regarding trade tariffs? A: We expect a material improvement in exports, aiming to increase the contribution to 10% of overall revenue from the current 6%. The U.S. business model change is complete, and we have a strong order book from the Middle East, Europe, and Australia. We don't see a material impact from tariffs as we have passed on the cost increases to customers. - Chirayu Upadhyaya, Head - Investor Relations

Q: What is the guidance for EBIT margins in the cables and wires segment for the next three to four years? A: Our guidance under Project Spring is for EBITDA margins in the cables and wires business to be consistently in the 11% to 13% range. For FY25, EBIT margins were at 13.6%, with EBITDA margins between 14% to 15%. - Chirayu Upadhyaya, Head - Investor Relations

Q: Can you explain the 100 bps margin expansion in cables and wires? Is it regionally driven or broad-based? A: The margin expansion is due to operating leverage and a change in product mix. Sequentially, wires grew faster than cables, contributing to margin improvement as wires have better margins. The international business underperformance slightly offset this improvement. - Chirayu Upadhyaya, Head - Investor Relations

Q: What is Polycab's strategy for the solar portfolio, now the third largest category within FMEG? A: We sell solar inverters, outsourcing manufacturing and selling to end customers. There are no plans for in-house manufacturing. We will continue with this model, expanding vendor partnerships to increase sourcing and service the full range up to 325 kilowatts. - Chirayu Upadhyaya, Head - Investor Relations

Q: How do you attribute Polycab's superior margin profile compared to peers? A: Our superior margins are due to a mix of business factors, including a better product mix, higher pricing, and superior export margins. Our pricing is 2% to 3% higher on cables and 4% to 5% on wires compared to peers, contributing to better margins. - Chirayu Upadhyaya, Head - Investor Relations

Q: What is the impact of RDSS-related projects on your business, and how do you see this opportunity beyond FY26? A: The RDSS scheme is up till FY26, with tenders continuously awarded. We have a strong order backlog for FY26, and future participation depends on government extension of the scheme. - Chirayu Upadhyaya, Head - Investor Relations

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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