POLYCAB - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.3
| Stock Code | POLYCAB | Market Cap | 1,12,710 Cr. | Current Price | 7,484 ₹ | High / Low | 7,948 ₹ |
| Stock P/E | 43.5 | Book Value | 697 ₹ | Dividend Yield | 0.47 % | ROCE | 29.7 % |
| ROE | 21.4 % | Face Value | 10.0 ₹ | DMA 50 | 7,316 ₹ | DMA 200 | 7,034 ₹ |
| Chg in FII Hold | 0.86 % | Chg in DII Hold | -0.57 % | PAT Qtr | 618 Cr. | PAT Prev Qtr | 675 Cr. |
| RSI | 56.8 | MACD | -112 | Volume | 9,35,792 | Avg Vol 1Wk | 4,25,343 |
| Low price | 4,555 ₹ | High price | 7,948 ₹ | PEG Ratio | 1.34 | Debt to equity | 0.01 |
| 52w Index | 86.3 % | Qtr Profit Var | 36.4 % | EPS | 172 ₹ | Industry PE | 18.2 |
📊 Analysis: Polycab India Ltd. shows strong fundamentals with high ROCE (29.7%) and ROE (21.4%), indicating efficient capital utilization and profitability. The PEG ratio of 1.34 suggests moderate valuation relative to growth. Debt-to-equity is extremely low (0.01), making it financially stable. However, the stock P/E of 43.5 is significantly higher than the industry average of 18.2, implying overvaluation in the short term. Technical indicators (RSI 56.8, MACD negative) suggest consolidation. Long-term investors may consider entry in the ₹6,800–₹7,200 zone, closer to DMA levels, for better risk-reward.
📈 Exit Strategy: If already holding, investors should maintain positions for 3–5 years given strong growth metrics and industry leadership. Partial profit booking can be considered near ₹8,000 levels if valuations stretch further. Long-term holding is justified due to consistent EPS growth, strong ROCE/ROE, and low debt profile. Dividend yield is modest (0.47%), so the focus remains on capital appreciation.
✅ Positive
- High ROCE (29.7%) and ROE (21.4%) indicate strong operational efficiency.
- Debt-to-equity ratio of 0.01 ensures financial stability.
- EPS of ₹172 with strong quarterly profit growth (36.4%).
- Strong FII inflows (+0.86%) show institutional confidence.
⚠️ Limitation
- High P/E (43.5) compared to industry average (18.2) suggests overvaluation.
- Dividend yield is low (0.47%), limiting passive income.
- Recent quarterly PAT declined from ₹675 Cr. to ₹618 Cr.
📉 Company Negative News
- Short-term profit decline in the latest quarter.
- High valuation may limit near-term upside.
📈 Company Positive News
- Strong revenue and profit growth over the year.
- Market leadership in cables and wires with expanding product portfolio.
- Consistent institutional buying (FII increase).
🏭 Industry
- Industry PE at 18.2 indicates sector is moderately valued.
- Growing demand for infrastructure, housing, and electrification supports long-term growth.
- Polycab is well-positioned as a market leader in wires and cables.
🔎 Conclusion
Polycab is a strong long-term investment candidate backed by robust fundamentals, low debt, and industry leadership. Ideal entry is around ₹6,800–₹7,200 for better valuation comfort. Existing investors should hold for 3–5 years, with partial profit booking near ₹8,000. Long-term growth prospects remain intact, making it a solid compounder in the electricals and cables sector.