Polycab India is the top manufacturer of electric cables in India. The company engages in designing, manufacturing, and selling electric wires, cables, and electric wiring accessories. The company has an overall market share of 12% in the domestic wires and cable segment. FY20 revenue by segment: wires and cables, 84%; fast-moving electric goods (FMEG), 9%; other, 7%. The company reported better-than-expected Q2 FY21 results. It has ROE of 20%
The company has a diversified customer base in sectors like health care, oil and gas, renewable energy infrastructure, etc., providing customers with a variety of wire and cable options. With more than 1B subscribers, India is the second largest telecom network in the world. The advent of 5G, which requires fourfold the current fiber density and 20x more base stations, will boost sales of optical fiber cables and other telecommunication cables.
The national infrastructure pipeline is a group of 6,500 projects across 23 sectors lined up with private and public investments of $1.4T. Rural electrification programs focus on the electrification of rural areas. This would boost demand from the transmission and distribution sector for wires and cables. It would also create a secondary market for FMEG products, which are bought post-electrification. The Indian governments' housing-for-all initiative, which aims to help 20M households by 2022, and smart cities mission would drive sales growth for a market leader like Polycab in the EPC , wires and cables, and FMEG segments.
Manufacturing expansion and distribution network could boost growth The Company engages in steady investments in setting up new plants, capacity expansion, and automation, which has helped it stay ahead of the competition. The company maintains its quality, efficiency, and logistics through strategic backward integration in its manufacturing process. Polycab has more than 25 manufacturing facilities in strategic locations, of which four manufacture FMEG products, supported by 30 depots across India. Distribution channels, dealers, and distributors contribute 80% of the revenue and cater to retail customers.
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