*Polycab – Q4FY21 Concall Update – Nirmal Bang Sec.*
*Outlook – Positive*
The stock is trading at 28.2x FY22E consensus earnings
• Had a good quarter with market share gain
• Domestic demand remains strong; pandemic related supply side constraints were minimal in Q4 hence construction activity picked up in full swing
• Q4 consolidated revenue was up by 43% yoy and 9% qoq with healthy underlying growth across business segments and improving share of B2C business
• EBITDA margins were helped by pricing actions, leverage benefits and cost saving initiatives
• A&P spend was lower than last year however this quarter is an aberration and it is likely to increase in coming quarters; *For FY22, A&P spend is likely to in the range of Rs1.5-2bn*
• The contribution from B2C product portfolio, on a standalone basis, grew from 32.6% in FY20 to 40.2% in FY21. Adjusted for large export order, this would have been higher
• Margins are expected to increase as the contribution from B2C is increasing
• Retail outlets reach increased by 32% yoy
• *To drive the multiyear transformation, journey the company has launched “Project Leap” and identified 4 key areas to take it forward – (a) Energizing B2B – by recalibrating business model, refining value proposition (b) B2C – exploring adjacencies, redefining brand architecture (c) Organization structure (d) Suitability – with this the company has guided for Rs 20,000 cr revenues by FY26*
• *2H would be better than 1H and in 1H – Q2 would be better than Q1*
• Capex – Rs 300 cr in FY22 – 35% would go for FMEG
• targeting 12% EBITDA margins for FMEG segment
Wires and Cables
• Wires and Cables business grew by 35% yoy to Rs 2487.5 cr, led by healthy pickup in infra and industrial project activities, improving consumer sentiment, higher distribution reach, enhanced portfolio and higher sales realisation.
• Institution business outgrew distribution business. Overall business continues to gain traction on sequential basis
• Export's revenue in Q4 stood at Rs 137 cr or 4.5% of overall sales. YoY decline is largely on account of higher base of Dangote order (Rs 10 cr in Q 4FY21 vs 320 cr in Q4FY20). Excluding that, exports portfolio was lower by about 7% yoy on account of delay in some large construction projects globally
• Expect business to go to back to growth trajectory soon
• As per management’s assessment, they have gained ~200 bps market share gain in FY21
• Profitability was stable post price hikes taken as the price of raw material basket has increased in double digit – as against this the price hikes taken is lower teens
FMEG
• FMEG grew by 89% yoy in Q4 on back of strong execution
• In Q4 - FMEG contribution to overall sales increased 290bps yoy to 11.4%
• Fans posted healthy growth despite stiff competition and cost push. Lighting products business nearly doubled led better demand supply alignment. Switches and Switchgears grew 2.5x while other categories also witnessed strong offtake
• Improved product mix, calibrated pricing actions and design optimisation initiatives led to healthy improvement in profitability during the quarter
• Segment EBIT margin at 7 % in Q4 improved further by 108bps vs Q3
• FY21 – 35-40% fans, 25-30% switch gears
Other
• Declined yoy due to covid impact and high base of last year
*Outlook – Positive*
The stock is trading at 28.2x FY22E consensus earnings
• Had a good quarter with market share gain
• Domestic demand remains strong; pandemic related supply side constraints were minimal in Q4 hence construction activity picked up in full swing
• Q4 consolidated revenue was up by 43% yoy and 9% qoq with healthy underlying growth across business segments and improving share of B2C business
• EBITDA margins were helped by pricing actions, leverage benefits and cost saving initiatives
• A&P spend was lower than last year however this quarter is an aberration and it is likely to increase in coming quarters; *For FY22, A&P spend is likely to in the range of Rs1.5-2bn*
• The contribution from B2C product portfolio, on a standalone basis, grew from 32.6% in FY20 to 40.2% in FY21. Adjusted for large export order, this would have been higher
• Margins are expected to increase as the contribution from B2C is increasing
• Retail outlets reach increased by 32% yoy
• *To drive the multiyear transformation, journey the company has launched “Project Leap” and identified 4 key areas to take it forward – (a) Energizing B2B – by recalibrating business model, refining value proposition (b) B2C – exploring adjacencies, redefining brand architecture (c) Organization structure (d) Suitability – with this the company has guided for Rs 20,000 cr revenues by FY26*
• *2H would be better than 1H and in 1H – Q2 would be better than Q1*
• Capex – Rs 300 cr in FY22 – 35% would go for FMEG
• targeting 12% EBITDA margins for FMEG segment
Wires and Cables
• Wires and Cables business grew by 35% yoy to Rs 2487.5 cr, led by healthy pickup in infra and industrial project activities, improving consumer sentiment, higher distribution reach, enhanced portfolio and higher sales realisation.
• Institution business outgrew distribution business. Overall business continues to gain traction on sequential basis
• Export's revenue in Q4 stood at Rs 137 cr or 4.5% of overall sales. YoY decline is largely on account of higher base of Dangote order (Rs 10 cr in Q 4FY21 vs 320 cr in Q4FY20). Excluding that, exports portfolio was lower by about 7% yoy on account of delay in some large construction projects globally
• Expect business to go to back to growth trajectory soon
• As per management’s assessment, they have gained ~200 bps market share gain in FY21
• Profitability was stable post price hikes taken as the price of raw material basket has increased in double digit – as against this the price hikes taken is lower teens
FMEG
• FMEG grew by 89% yoy in Q4 on back of strong execution
• In Q4 - FMEG contribution to overall sales increased 290bps yoy to 11.4%
• Fans posted healthy growth despite stiff competition and cost push. Lighting products business nearly doubled led better demand supply alignment. Switches and Switchgears grew 2.5x while other categories also witnessed strong offtake
• Improved product mix, calibrated pricing actions and design optimisation initiatives led to healthy improvement in profitability during the quarter
• Segment EBIT margin at 7 % in Q4 improved further by 108bps vs Q3
• FY21 – 35-40% fans, 25-30% switch gears
Other
• Declined yoy due to covid impact and high base of last year
*Jubilant Ingrevia Ltd.* | *CMP* Rs. 589 | *M Cap* Rs. 9382 Cr | *52 W H/L* 589/241
(Nirmal Bang Retail Research)
*Result has improved*
Revenue from Operations came at Rs. 1078 Cr (20.7% QoQ, 31% YoY) vs QoQ Rs. 893 Cr, YoY Rs. 823 Cr
EBIDTA came at Rs. 200 Cr (119.8% QoQ, 104.1% YoY) vs QoQ Rs. 91 Cr, YoY Rs. 98 Cr
EBITDA Margin came at 18.6% vs QoQ 10.2%, YoY 11.9%
Adj. PAT came at Rs. 95 Cr vs YoY Rs. 48 Cr
Quarter EPS is Rs. 6
Share is trading at P/E of 29.6x FY21 EPS
(Nirmal Bang Retail Research)
*Result has improved*
Revenue from Operations came at Rs. 1078 Cr (20.7% QoQ, 31% YoY) vs QoQ Rs. 893 Cr, YoY Rs. 823 Cr
EBIDTA came at Rs. 200 Cr (119.8% QoQ, 104.1% YoY) vs QoQ Rs. 91 Cr, YoY Rs. 98 Cr
EBITDA Margin came at 18.6% vs QoQ 10.2%, YoY 11.9%
Adj. PAT came at Rs. 95 Cr vs YoY Rs. 48 Cr
Quarter EPS is Rs. 6
Share is trading at P/E of 29.6x FY21 EPS
Bulk Deal as on 07-06-21
Coastal Corporation Ltd
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- 5 Lk @ 250.14 Satyasree Achanta
Bharat Immunological & Biological
- 4.96 Lk @ 61.05 Alpha Leon Enterprises