Polycab hosted a conference call on May 15, 2023. In the conference call the company was represented by G. Tongia, Executive Director. 

Key takeaways of the call

W&C demand continued to be strong private capex revival and real estate pickup. For Q4fy23 volume growth is in high single digit for W&C.  FMEG has soft year in FY23.

Price hike in CW is in the mid single digit range.  Low single digit to high single digit for fans to comply with BEE norms.

Planned capex for FY24 is about Rs 600-700 crore.    

The company has moved to super distributor model already in FMEG.

The company is well on target to achieve Rs 200 billion of topline by FY26.  Double digit growth for next year as well will be achieved.

OPM on higher side of guidance range due to exports and wires business doing well. 13.1% EBITDA margin for CW business continue to be in guided range and the fY23 EBITDA margin of CW at 13.1% is within the guided range. Ebitda margin of 11-15% is sustainable for Wires & Cables.

High single digit EBIT margin for FMEG in medium to long term expect.

Project leap completed 2 years this month.  Made considerable progrees in each of 4 focus areas i.e. customer centricity, go to market excellence, winning with new products and set up organisation enablers.  Etira brand for retail wires and switches for price conscious customers.

Aiming to be top 5 cables player globally.

Of WC revenue about 70% is cables and 30% wires. Wires will typically operate at an EBITDA margin of about 10-11% and wires at about 14-15% range so effectively a difference of about 400 bps in EBITDA margin between cables and wires.

Under Project Leap it targets about 10% of overall revenue to be come from exports by FY26.  Now exports to more than 70 countries the company have approvals in USA and various other countries. Every year the company will add new geographies largely developed countries. USA accounts for about 50-56% of the exports and other countries will in single digits.

Taking efforts for faster growth of wires business within WC with increasing brand building - Etira focused at economy price conscious segment and green wires in premium segment.

Capacity utilisaiton for Wirest & Cables was sub 70%. Capacity is not a road block for FMEG growth as capacity can be set up in short gestation of about 2 months.   

Of the overall FMEG revenue  majority comes from fans and lightings with about 15% from switches.  The contribution of pumps is currently marginal. 

The edge of the company in the market compared to peers is the   largest distribution channel, which is has built over years  and good working relationship  with them for almost 3-5 decades. Secondly the number of SKUs. Further it is the only company that manufacturers each and every type of cables. Moreover it refill the products at distributor end in  less than 24 hours   which lessen the working capital for dealers.