Detailed Narrative
Robust Revenue Growth Across Key Segments
Polycab India Limited reported a strong Q3 FY26 with consolidated revenues growing 46% year-over-year. This growth was primarily driven by the Wires and Cables (W&C) segment, which saw a 53% YoY revenue increase, with domestic W&C volumes growing by nearly 40%. The Fast Moving Electrical Goods (FMEG) business also contributed significantly, achieving 17% YoY growth, notably propelled by its solar business which grew over 2x YoY.
Profitability Impacted by Strategic Pricing Amidst Commodity Inflation
EBITDA margins for Q3 FY26 stood at 12.7%, impacted by a one-off📎 gratuity provision of ₹219 million and a strategic decision to stagger the pass-through of sharp commodity price increases. Copper prices, for instance, rose 22% sequentially this quarter, and 35% from April to December. Management indicated that 75-80% of the commodity inflation was passed on within the quarter, with the remaining expected to be passed on in Q4 FY26, a conscious choice to protect volumes and market share.
Strong Balance Sheet and Committed Capital Expenditure
The company maintains a healthy financial position, closing the quarter with a net cash position of ₹30.3 billion. Capital expenditure for Q3 FY26 was ₹3.4 billion, bringing the 9M FY26 total to ₹10.9 billion. Polycab reiterated its Project Spring guidance, committing to invest ₹12 billion to ₹16 billion annually through FY30, signaling continued focus on long-term capacity expansion and growth initiatives.
Working Capital Cycle and Inventory Management
The working capital cycle for the quarter increased to 27 days, primarily due to a strategic build-up of inventory in anticipation of strong demand in Q4 FY26, particularly for wires. While this is higher than the long-term average, management expects the working capital cycle to normalize to its steady range of 50-55 days in the coming quarters⏳, indicating a temporary deviation for strategic market positioning.
FMEG Segment Returns to Profitability, Solar Leads Growth
The FMEG segment achieved profitability for the fourth consecutive quarter, with its solar business emerging as a standout performer, growing over 2x YoY and becoming the largest contributor to the segment. While the fans business experienced a softer start to the quarter due to channel inventory and weather, it saw some recovery in December. Polycab aims for FMEG EBITDA margins of 8-10% by FY30, supported by strategic A&P investments.
Robust Demand Environment and Significant Market Share Gains
Management highlighted a robust demand environment, driven by sustained government and private capex, as well as a strong real estate sector. The exceptional 59% YoY growth in domestic W&C revenue, coupled with a 40% volume growth, significantly outpaced the estimated industry growth of around 20%, indicating substantial market share gains. This performance is attributed to execution excellence under Project Spring and improved channel partner relationships.
EPC Business and BharatNet Project Progress
The EPC business recorded revenues of ₹406.9 million, growing 4% YoY, with a segment margin of 6.7%. During the quarter, Polycab commenced execution of existing orders under the BharatNet scheme. This project is expected to generate ₹4.5 billion for project execution over the next three years and an additional ₹3.5 billion for project O&M over ten years, providing significant long-term revenue visibility for the EPC segment.