The brokerage has a “buy” recommendation on the stock.
Jefferies said that despite the 25% uptick from March 2025, Polycab is trading at 34x its financial year 2026 earnings estimates, which is just 4% higher than its historic five-year average.
In financial year 2025, the company witnessed a further 1% market share gain in organised cables and wires segment, which is now at 26%-27% compared to 18% in financial year 2020, Jefferies said, adding that a timely capex of ₹2,800 crore in the last four years, aided the Compounded Annual Growth Rate (CAGR) of 26% in Polycab’s sales in the cable and wires segment.
The fast moving electrical goods (FMEG) segment, which makes up 10% of Polycab’s sales, turned profitable after 10 quarters.
Jefferies said it estimates the FY25-28 earnings-per-share CAGR to be over 26%, driven by strong order book and better FMEG margins.
Outlook and key risks
Polycab has provided a healthy outlook for the next five years:
- Cables & wires business: 1.5x of market growth in core segments
- FMEG business: 1.5-2x of market growth
- Cables and wires EBITDA margin: 11-13%
- FMEG EBITDA margin: 8-10%
- Capex: ₹6,000 crore to ₹8,000 crore
- Dividend payout ratio: More than 30%
- Exports contribution: over 10%
Jefferies said it’s outlook too is largely in-line with the company’s.
The brokerage said slowdown in housing / private capex / FMEG tractions, copper volatility are key risks. On competition concerns, it estimates no major impact on near-term financials of incumbents but investor concerns on long-term growth outlook will likely rise, it said.
“In view of the strong order book in cables and wires (especially Bharat Net), we raise the FY27-28 earnings-per-share estimate by 2.4%, retain price-to-earnings ratio at 33x, in-line with historical five-year average,” Jefferies said.
Of the 36 analysts that have coverage on the stock, 26 have a “buy” rating, five have a “hold” rating and five have a “sell” rating.
Shares of Polycab are trading 4.7% higher at ₹6,285. The stock is still down 15% so far in 2025.
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