Polycab India Ltd. Stock Hits Fresh 52 Week High

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Source: Tradingview

Business Model:

Polycab India Ltd. is a company primarily engaged in manufacturing and selling electrical products. Their product range includes wires, cables, and fast-moving electrical goods (FMEG) sold under the ‘POLYCAB’ brand. In addition to wires and cables, they manufacture and sell various FMEG products such as electric fans, LED lighting and luminaires, switches, switchgear, solar products, and conduits and accessories. They are known for providing a wide range of electrical solutions, including cables, wires, lighting, and solar power products, making them a significant player in the electrical industry in India and beyond. Polycab’s diverse product portfolio caters to both residential and industrial customers, offering a comprehensive suite of electrical solutions.

Stock Performance:

Why is Polycab share price rising?

Acquisition of of Steel Matrix

Polycab India recently announced its complete acquisition of Steel Matrix, securing the remaining 25% shares on June 30, 2023. This transaction has made Steel Matrix a wholly owned subsidiary of Polycab India.

Steel Matrix specializes in manufacturing steel drums and bobbins for cables and wires, making it a strategic acquisition for Polycab. This move is expected to enhance Polycab’s supply chain by ensuring a reliable source of high-quality packing materials. Additionally, it will lead to improved control over the supply chain and increased operational efficiency.

Furthermore, this acquisition is poised to strengthen the backward integration of Polycab India’s manufacturing process, a crucial aspect of their operations.

Favorable Government Policies

The Indian government has launched ambitious initiatives to address housing needs and promote international trade. Under the ‘housing for all’ scheme, the government aims to construct 12 million urban and 28.5 million rural houses.

To facilitate international trade, the government introduced key export policies such as the Remission of Duties or Taxes on Export Products (RoDTEP) scheme, Advance Authorisation Scheme (AAS), and the Export Promotion Capital Goods (EPCG) Scheme.

In the power sector, the government has implemented reforms to improve distribution systems and bolster sub-transmission and distribution networks. The Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) has played a pivotal role in expanding electrification across India, with 290 million households now electrified.

These policy reforms have substantially increased demand for electrical equipment and products, benefiting companies like Polycab India. They have also experienced revenue growth from exports, while the real estate sector’s revival has further boosted their prospects.

Growing Indian Middle-Class

Growing middle-class and rising disposable income is driving customer preference for safe, quality, smart, user-friendly, and experience-based products leading to increasing demand for premium products.

This has led to rise in demand for all the products such as wires and cables, fans, lights, switches and switch gears, across the portfolio.

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