In August 2025, we had recommended investors to accumulate the stock of Polycab when the stock was trading at ₹7,085 and at 39 times one-year forward earnings. The tailwinds from heightened infrastructure and real estate activity, amplified by lower interest rates, supported the stock which has returned 33 per cent till now.

The stock, now trading at 43 times one-year forward earnings, is at a 16 per cent premium to last five-year average. While the company’s growth outlook remains strong, it will taper to an extent, given the higher base of the last few years and macroeconomic conditions getting more challenging from here, including prospects of a rate hike. Hence, we now recommend investors to book partial profits from the stock. Growth prospects remain good, but given valuation and macroeconomic headwinds, investors can take some chips off the table.

Wires and cables

As shown in the figure, the company operates three divisions, which have delivered strong growth in the last three years.

Polycab is the country’s largest manufacturer of wires and cables, with a scale more than double that of the second-largest player. The segment delivered a revenue CAGR of 26 per cent during FY23-26, driven by three key factors. First, higher infrastructure spending by the Central government, which grew at an 18 per cent CAGR over FY23-26 to ₹12 lakh crore in FY26, supported demand. Second, real estate activity in the top 10 cities had remained on an uptrend over the past three years, alongside growth in the affordable housing segment, aided by government support. Third, the rate-cut cycle that began last year, along with lower indirect and direct taxes, has further boosted demand in the construction segment.

Pricing has also played a part as Polycab passes any commodity price movement to the customer in a month. The segment reported 18 per cent year-on-year volume growth in FY26 and price pass-through accounted for 13 per cent growth. Copper and aluminum prices soared last year internationally. This has been further stoked by the 11 per cent currency depreciation in FY26, especially for copper, which is largely imported.

For the next few years, Polycab is likely to sustain high growth based on the same factors as the last three years, but will face headwinds. Government spending on capital infrastructure has attained a strong base of ₹12.2 lakh crore, but the pace of expansion from here will moderate. This has been seen in FY26 itself with the allocation expanding only 9 per cent in FY26 Budget estimates. The impact to fiscal deficit due to the implications of the US-Israel-Iran war may limit the elbowroom for a high growth in capital expenditure. Real estate activity will have to face a scenario of rate hike cycle compared to expectations of rate cuts prior to the West Asia conflict. The high prices of copper and aluminum will also be a minor headwind to volume growth in the short term.

FMEG and EPC

Polycab’s FMEG (fast moving electrical goods) is now led by solar division, which has more than doubled in each of the last two fiscals. The division manufactures solar cables, modules and inverters. With government support in the form of PM Surya Ghar and PM Kusum, adoption of solar panels has grown exponentially, which has supported the segment growth. This is expected to continue despite the high base attained for Polycab. The other two divisions of fans and lighting under the FMEG segment are facing only modest growth prospects, as competition has intensified. But the segment is aiming for higher profitability as it matures, which should drive bottom-line growth. The segment reported 4 per cent EBITDA margin and aims to generate 8-10 per cent EBITDA margins by FY30.

The EPC division, which undertakes cabling and related projects, will be anchored by two large projects. The company has a ₹8,000-crore order-book for the next three years under Bharat Net (high-speed Internet scheme with BSNL) and RDSS (power distribution scheme) projects, with an outlook for stable high single-digit margins for the next three years, and are underway.

Financials

Polycab has a strong balance sheet with net cash of ₹4,000 crore in March 2026. The company also has a strong capex plan of ₹1,200-1,800 crore for the next five years. A large portion of the expansion will be focused on wires and cable capacity expansion. The company will start commercial production of extra high voltage cable (EHV), which will be an import replacement in India. With strong tailwinds, the company has reported strong revenue/EBITDA/PAT growth of 27 per cent/29 per cent/28 per cent CAGR in FY23-26 as shown in the figure. The company performed well in FY26 with strong growth across segments and it also increased its market share in cables and wires in India from 25-26 per cent in FY25 to 31 per cent in FY26. On a high base, volatile macroeconomic outlook and high valuations, investors can book partial profits from the recent surge in the stock returns. The infrastructure focus on power and renewable capacity addition and continued momentum in real estate and affordable housing should support the largest and well-established player for the long run, nonetheless.

Published on June 13, 2026