*Polycab – Q3FY20*
*Concall – Nirmal Bang Sec*
*Outlook – Positive*
*_General_*
• Domestic demand remain challenging due to liquidity
• 9MFY20 Margins looks optical lower; actually it is 50 bps higher than FY19
• Working capital has improved due to steps taken like channel financing, inventory rationalization etc.
• Capex FY20 300 cr – used for backward integration, some debottlenecking and some on FMEG
• 35% of business is B2C – the company is spending 3.5-4% of B2C revenues on A&P. it is likely to increase marginally. Despite this the management is targeting 100 bps improvement in margins every year
*_Wires and Cables_*
• Grew by 20%
• Growth in cables was largely driven by exports which grew strongly on the back of a large order as well increasing traction seen in few developed geographies.
• EBIT margin lower yoy due to investments in marketing
o Cables is divided into (1) Domestic – which is further divided into (a) Institutional – degrowth, coz slowdown, liquidity channels and had high base (b) Channel (2) Exports - 430 cr
• Wires – growth across all regions
*_FMEG_*
• 10% of revenues in 9MFY20
• Likely to maintain healthy momentum
• Fans – 40-45% of revenues; cyclical business.