Polycab India Ltd (POLYCAB) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day and welcome to the Polycab India Limited Q2 FY '27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note this conference is being recorded. I now hand the conference over to Mr. Niyant Maru, Chief Financial Officer, Polycab India Limited. Thank you and over to you, sir.
Niyant Maru (Polycab India Limited): Thank you. A very good evening to everyone and thank you for joining us. I hope all of you are staying healthy and gearing up for the upcoming festive season. On this call, we shall discuss the Q2 FY '27 results, which were approved in the board meeting held earlier today. We will be referring to the earnings presentation, financial results and financial statements, which are available on the stock exchanges as well as on the investor relations page of our website. Joining me today from the management team we have our Joint Managing Director, Mr. Nikhil Jaisinghani, and Head of Investor Relations, Aditya Nankani. Let me now hand over the call to Nikhil for his comments. Over to you, Nikhil.
Nikhil Jaisinghani (Polycab India Limited): Thanks, Niyant. Good evening, everyone. As we conclude the first half of FY '27, I am pleased to share that Polycab has delivered its highest ever quarterly and half-yearly revenue and profitability. This performance underscores the resilience of our operating model and the strength of disciplined ex- execution across the organization. The Wires and Cables business continues to deliver robust growth, supported by healthy demand trends, strong market positioning, and consistent execution.
Nikhil Jaisinghani (Polycab India Limited): The FMEG segment continued to strengthen its growth trajectory and recorded its seventh consecutive profitable quarter. Across the organization, we remain focused on execution excellence, translating strategic priorities into tangible outcomes while building a stronger foundation for sustainable long-term growth. Encouragingly, the initiatives under our strategic road map, Project Spring, are progressing in line with plan and are already beginning to yield meaningful results, reinforcing our confidence in both the strategy and our ability to execute it effectively. As we look ahead, our priorities remain firmly anchored on sustaining growth momentum, further enhancing our competitive advantages, and investing in innovation, talent, and capabilities. With a strong foundation in place and clear strategic direction, we are well positioned to capitalize on emerging opportunities and create enduring value for all our stakeholders. With that, I would now like to hand over to Gandharv.
Gandharv (Polycab India Limited): Thank you, Nikhil. While the global macro environment remains volatile during the quarter, we continue to believe that India remains one of the most compelling structural growth stories globally. Geopolitical tension, elevated energy prices, higher global bond yields, and disruptions across certain international shipping routes have created near-term uncertainty across markets. However, India continues to navigate and grow, supported by strong domestic demand, healthy investment activity, accelerating infrastructure creation, and increasing manufacturing competitiveness. The IMF, in its latest outlook, has raised India's growth outlook by 60 basis points despite higher global energy prices, citing stronger economic momentum, robust services activity, and sustained domestic demand. This confidence is reflected in the recent upward revisions to India's growth outlook by several other global agencies. Domestically, GDP growth for Q1 FY '27 came in at 7.8%, underscoring the resilience of the economy despite an increasingly uncertain external backdrop. Global monetary conditions remain tight as central banks continue to combat inflation, resulting in higher policy rates and bond yields across major economies. In India, the Monetary Policy Committee, MPC, unanimously raised the repo rate by 25 basis points to 5.5% and shifted the policy stance from neutral to calibrated tightening, implying interest rate cuts are not anticipated in the near term. While the external environment remains challenging, India's strong domestic demand, robust banking system, and sustained infrastructure investments continue to underpin the economic resilience. What gives us confidence is the breadth of growth visible across the economy. GST collections continue to remain healthy, growing by 15% year-on-year in July-August, government capital expenditure remains significantly at higher levels, and bank credit growth continues to trend close to 15% to 20%. Power demand has remained robust, reflecting healthy activity across industrial, infrastructure, and commercial sectors. The focus on infrastructure development continues, which is reflected in the government capex spend of INR 5.10 lakh crore during April to August 2026, implying an 18% year-on-year growth. The government has also approved another INR 1.9 lakh crore of capital outlay for Green Corridor Phase II, which includes evacuation of 135 GW of renewable energy and deployment of battery energy
Gandharv (Polycab India Limited): sewerage systems. All of this signals strong economic activity in India over the medium to long-term. These structural growth drivers continue to reinforce the long-term opportunity outlined under the Project Spring. While the near-term inflationary pressure are surfacing due to macroeconomic situations, both urban and rural demand continues to remain healthy. While government support measures are expected to aid broader consumption growth going forward. Importantly, India's revenue base remains predominantly domestic, which provides a degree of resilience in periods of global uncertainty. Continuing on the momentum, the company delivered yet another remarkable quarter of strong performance, underpinned by healthy revenue growth and profitability. Our performance reflects not only favorable demand conditions, but also the deliberate investments and strategic choices made over the past several years. The Wires and Cables business continued the positive momentum, leveraging its market leadership and execution capabilities. While the FMEG business has outperformed the market across categories, supported by a growing product portfolio and a wider customer reach. The progress we have achieved is underpinned by strong execution across our strategic priorities and continued investments in our growth prospects. We remain committed to operational excellence, disciplined capital deployment, and creating greater value for our stakeholders and customers across every touch point. Looking ahead, we see significant opportunities across our markets. Our priority will be to accelerate our growth initiatives, strengthen our brand, deepen distribution, and build the innovation and talent ecosystem needed to support the next phase of expansion. To sum up, our outlook remains unchanged. While commodity volatility, geopolitical developments, and logistics-related disruptions may continue to influence individual quarters, the structural drivers of the demand remain firmly intact and in place. We remain focused on disciplined execution of our Project Spring strategy, strengthening our market leadership position, and investing behind the significant long-term opportunities emerging across infrastructure, energy transition, manufacturing, urbanization, and exports. Now, we would like to update you with reference to the ongoing proceeding with respect to Asiatick Metals that we that we have filed an appeal before the Honorable National Company Law Appellate Tribunal, Principal Bench, New Delhi, and the Honorable NCLAT has stayed and kept in abeyance the order of admission in its entirety, including that of it being a commercial dispute of INR2.79 crores to set aside the order of admission passed by NCLT and initiation of the Corporate Insolvency Resolution Process, CIRP, against the company. The company had gone for a early hearing on October 15, which is today, and we are of reasonable opinion that we have argued well on the hearing and are reasonably confident and hopeful that we have a strong case with grounds on merits, and the judgement may land in our favor. We continue to monitor the situation and follow the due process as per law to get this resolved as quickly as possible. We do not expect any adverse or material impact on our financials or business operations arising from the said situation. I would now hand over to Aditya to take you through the financial performance for the quarter.
Aditya Nankani (Polycab India Limited): For the quarter ended September 30th, 2026, we delivered an exceptional performance reflecting the strength of our diversified business portfolio, disciplined execution and sustained demand across our end markets. Consolidated revenue grew by 53% year-on-year, with all business segments contributing meaningfully to this growth momentum. The company continued to maintain a strong operational performance during the quarter. EBITDA increased by 39% year-on-year, while EBITDA margins expanded by more than 50 basis points sequentially to 14.4%, supported by a favorable business mix and continued focus on operational efficiencies. Profitability remained robust, with profit after tax reaching a record high of Rs 9,900 million representing a 43% year-over-year increase. PAT margins stood at 10% for the quarter reflecting healthy earnings growth and sustained margin resilience. Our financial position remains very strong. Net cash stood at 45.2 billion as of September 30th, 2026, compared to Rs 29.4 billion a year ago. We also witnessed a further improvement in our working capital efficiency, with the average working capital cycle reducing to approximately 11 days in second quarter fiscal '27. This was aided by higher payable days arising from the increased use of letters of credit for our raw material procurement. As these benefits gradually normalize, we expect the working capital cycle to trend towards our long-term operating range of 45 to 50 days. During the first half of the year, we incurred capital expenditure of Rs 6.1 billion reflecting our ongoing investments in capacity expansion, supply chain capabilities and future growth platforms. On a half-year basis, I am pleased to share that H1 FY '27 marks the strongest first half performance in the company's history in terms of both top-line and profitability. Revenue grew by 46% year-on-year, crossing a significant milestone of Rs 180 billion. EBITDA increased by 36% year-on-year with margins remaining healthy at 14.1%, while profit after tax grew by 38% year-on-year translating into PAT margins of 9.9%. Let me now turn to slide six and discuss the performance of our wires and cables business. The wires and cables segment delivered a strong quarter recording 47% year-on-year revenue growth. Within this, the domestic wires and cables business grew by an impressive 50% year-on-year driven by healthy demand conditions, strong channel execution and favorable commodity-linked realizations. We delivered volume growth of mid-to-high single digit range on top of a strong base from the corresponding quarter last year demonstrating the underlying strength of demand. Within the portfolio, wires continued to outpace cables in terms of growth. Channel sales also grew faster than institutional sales, underscoring the resilience and effectiveness of our distribution-led model. From a regional perspective, the West remained our largest contributor, followed by the South, North and East, highlighting the broad-based nature of growth across markets. Despite challenging geopolitical environment, exports picked up strongly during the quarter as sales grew 17% year-on-year and grew 85% quarter-on-quarter. While exports accounted for a relatively lower share of overall revenues, the moderation in contribution is largely attributable to the significant faster growth in the domestic market, which expanded the overall revenue base. We continue to maintain a strong export order pipeline and remain confident about our long-term growth prospects of this business. EBIT margins in the wires and cables segment stood at 14.2%. Margins improved sequentially supported by a favorable product mix and continued operational excellence initiatives. In line with our Project Spring road map, we remain confident of sustaining medium to long-term EBITDA margins within our guided range of 11% to 13%. Turning now--
Aditya Nankani (Polycab India Limited): and our FMEG business. The FMEG segment delivered a breakthrough quarter, registering a remarkable 124% year-on-year growth with strong performance across all major product categories. Notably, this marks the 11th consecutive quarter of industry-leading growth, reflecting the effectiveness of our strategy, execution capabilities, and strengthening market position. Solar products, which constitute the largest category within our FMEG portfolio, continued to be the primary growth driver, registering manifold growth during this quarter. The segment continues to benefit from favorable structural tailwinds, including the PM Surya Ghar Yojana, various state-level support programs, and accelerating consumer adoption of renewable energy solutions. We remain highly optimistic about the long-term opportunity this category presents. The broader FMEG portfolio, comprising fans, lighting, switches, switchgear, conduits, pipes, and fittings, also delivered healthy growth. Performance was supported by sustained momentum in the real estate and construction sectors alongside our focused efforts on product innovation, distribution expansion, and deeper customer engagement. The segment also achieved a major profitability milestone with EBIT margins crossing the double-digit mark for the first time and recording a 10.1% margin during the quarter. Since achieving profitability in Q4 FY25, the business has consistently strengthened its earning profile while continuing to invest in talent, product development, innovation, and brand-building initiatives. Looking ahead, we remain highly confident about the long-term growth trajectory of the FMEG business. Our objective continues to be growing at 1.5x to 2x of the industry growth rate, while steadily enhancing profitability. Investments in distribution reach, product innovation, category expansion, and brand equity will remain central to driving sustainable value creation. Moving to slide 10 and our EPC business. The EPC segment reported revenues of Rs. 6,171 million in Q2 FY27, representing a healthy year-on-year growth of 53%. Segment profitability remained strong at Rs. 444 million, translating into an EBIT margin of 7.2%. Over the medium to long-term, we continue to expect sustainable margins for the EPC business to remain in the high single-digit range, supported by disciplined project selection, efficient execution, and a healthy order pipeline. In closing, I would like to sincerely thank all our stakeholders for their unwavering trust and continued support. The performance delivered during the quarter reflects the strength of our business model, the commitment of our teams, and the success of our long-term strategic investments. As we look ahead, we remain focused on executing our growth priorities, enhancing operational excellence, and creating sustainable value for all our stakeholders. With that, we conclude our prepared remarks and would be happy to take your questions.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Kevin Shah with Aditya Birla Money. Please go ahead.
Kevin Shah (Aditya Birla Money): Yeah, hi sir. Thanks for the opportunity and congratulations on a great set of numbers. So, firstly on the FMEG margin, so if you see the the 10.1% already at the upper end of your Project Leap targets. So, can you highlight what are the key drivers behind it and which of these segments are profitable or is it solely contributed by the solar segment? And would you be looking to revise your Project Leap targets after this?
Aditya Nankani (Polycab India Limited): Yeah, thank you Kevin for your question.
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