Multibagger FMEG stock rises after Nuvama raises price target, retains buy call

Shares of Polycab India were trading higher in early deals today after brokerage Nuvama raised its price target to Rs 7,700 and retained its buy call on the cables and wires player. The fast moving electric goods (FMEG) stock gained 1.56% to Rs 6732 against the previous close of Rs 6628.50. The multibagger stock has gained 89.41% in one year and risen 206% in two years. The stock zoomed 235% in the last three years.

Total 0.25 lakh shares of the firm changed hands amounting to a turnover of Rs 16.73 crore on BSE. Market cap of the firm stood at Rs 1 lakh crore in the current session.  

Polycab India has a one-year beta of 0.7, indicating very low volatility during the period. Polycab India shares stand higher than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages. The FMEG stock is neither overbought nor oversold on charts, indicates its RSI at 43.5.

The brokerage is bullish on the stock.

“Polycab reported growth of 28%/35%/44% in revenue/EBITDA/PAT during FY24. C&W segment revenue grew 28% YoY. Project LEAP is on track and likely to achieve the guidance earlier than expected. Exports softened due to transition to the distribution model in the key market of the US along with tepid demand across few geographies, which would recover eventually,” said the brokerage.

“Polycab is fortifying its production infrastructure to capitalise on the anticipated uptick in market demand and solidifying its position too as a market leader. We reckon revenue/EBITDA/PAT shall grow at a CAGR of 17%/17%/16% over FY24–26E. We are raising price target to Rs 7,700, valuing the stock at 48x PE on FY26E EPS (earlier 46x); retain ‘BUY’,” added the brokerage.

Global brokerage Jefferies has a buy call on the Polycab stock with a price target of Rs 8,420.  According to Jefferies’ estimates, the cables and wires business will drive 25% plus PAT CAGR in FY24-27. FY24 saw further market share gains in organised business to 25-26%, rising 2-3% YoY.  95% in-house production helped sustain 29% gross margins despite raw material volatility.

Polycab India Limited is the country's largest manufacturer of wires and cables. The company's business operations span across India through 23 manufacturing facilities, 15 plus offices and 25 plus warehouses.