Polycab India Limited

Polycab India reported a strong Q2 FY26 with consolidated revenue growing 18% YoY. This contributed to the highest ever half-yearly revenue, crossing ₹12,000 crores, with a 21% YoY growth. Profitability also reached new highs, with PAT touching approximately ₹700 crores for the first time in Q2, reflecting a 56% YoY growth and a PAT margin of 10.7%. The company's EBITDA grew by 62% YoY, significantly outpacing revenue growth, and the EBITDA margin stood at 15.8%, an improvement of ~430 bps YoY and ~130 bps QoQ.

The Wires & Cables business was a primary growth driver, delivering a 21% YoY revenue growth in Q2, supported by high-teen volume expansion. The domestic Wires & Cables segment recorded a strong 21% YoY growth, despite a high base from the previous year. This performance was attributed to higher government spending, improved project execution, and a favorable commodity environment, leading to strengthened market position and market share gains. EBIT margins for the segment stood at 15.1%, improving by ~270 bps YoY and ~40 bps QoQ, supported by operating leverage and a favorable business mix.

The FMEG business achieved its third consecutive profitable quarter, benefiting from continued focus on premiumization and operating leverage. While solar products and lighting categories showed healthy growth, the fans category faced headwinds due to prolonged monsoon and elevated channel inventory, resulting in marginal degrowth. Management aims to outpace industry growth by 1.5x to 2x and progress towards an 8%-10% EBITDA target by FY2030, driven by gross margin expansion and increasing contribution from higher-margin products like switchgears and switches.

The EPC business experienced a 19% YoY decline in revenues to ₹402.4 crores in Q2 FY26, primarily due to project execution cycles. The segment's profitability was ₹73 crores, translating to a margin of 18.1%. This included a one-time^📎 gain of approximately ₹30 crores; excluding this, the margin would be around 10%, consistent with the company's mid- to long-term guidance. Management expects the second half of the year to be significantly better for EPC, with the execution of RDSS cable supply and BharatNet projects commencing from Q3.

Polycab received a significant positive development regarding its income tax matter. Following a search in December 2023 and subsequent assessment orders for AY 2014-2024, the company had faced a total tax demand of ₹52.563 crores plus ₹17.558 crores in interest. However, during the quarter ended September 30, 2025, the CIT(A) allowed the company's appeals in full, resulting in NIL tax demand. The order giving effect to this decision is currently pending before the assessing officer.

The company continues to make steady progress under Project Spring, its strategic guidance through FY2030. Capital expenditure for Q2 was ₹330 crores, bringing the H1 FY26 spend to ₹750 crores, in line with the annual guidance of ₹1,200-₹1,600 crores. Polycab also raised its dividend payout to 26.3% from 25.5% last year, aligning with its goal of crossing a 30% dividend payout by FY2030. The company maintains a strong balance sheet with a net cash position of ₹2,940 crores.

While major global economies show signs of a slowdown, India continues to stand out as the fastest-growing major economy, supported by strong domestic consumption and robust government capex. The real estate sector remains healthy, further supporting demand for wires. Management acknowledged new competition from large groups like Adani and Birla, but noted that their market entry would take 1-1.5 years. Polycab plans to continue focusing on its initiatives, strategy, and market share gains, adapting to competitive changes as they arise.