Three Problems Hit Polycab India at Once. Is It a Crisis?
A Commodity Business That Stopped Being One
Every apartment block going up in Pune, every solar rooftop installed under PM Surya Ghar, every data centre humming in Chennai’s OMR corridor they all need the same unglamorous thing: copper wrapped in insulation, running through walls and conduits. Polycab makes most of it. That single fact explains almost everything about the company’s last three years, and why the current turbulence is a chapter, not the story.
Polycab started as a wires and cables manufacturer in Gujarat, serving a fragmented market where the main selling proposition was price. The pivot over the last decade was to treat cables as the physical backbone of India’s infrastructure ambitions and price them accordingly. Today, wires and cables account for 88% of revenue, but look at the margin structure, and you understand why this concentrated revenue mix is not a problem.
The proof is in a decade of return ratios. ROCE has gone from 20% in FY16 to 28% by FY25. ROIC has more than doubled from 14.6% to 28.7%. The balance sheet, once modestly leveraged at 0.45× debt-to-equity, is now effectively zero. EPS has compounded from ₹13 in FY16 to ₹134 in FY25, a 10× journey over nine years at roughly 30% CAGR. Gross margins have expanded from 28% to 31.5% over the same period, even through two commodity cycles.
What makes this more than a lucky ride on an infrastructure wave is the consistency of capital discipline. Debt-to-equity at 0.01×. Interest coverage at 16.9×. Operating cash flows accelerated to ₹2,213 crore in the first nine months of FY26, more than 2.5 times the same period last year. This is a business that has genuinely gotten better at deploying capital over a decade, not one that simply grew with the tide.
What Polycab India Actually Sells
The revenue mix is intentionally concentrated. Wires and cables at 88% of revenue reflect a deliberate strategy to be the undisputed leader in one large, structurally growing market rather than a middling participant in many.
The FMEG segment fans, lighting, switches, switchgear, solar inverters and EPC together account for the remaining 12%. These are not core earnings drivers today, but they matter structurally. FMEG has turned profitable for four consecutive quarters, with solar inverters now the largest category within it, running at high single-digit margins. The fans segment, which had been loss-making due to competitive intensity, is expected to turn profitable as the company adapts to new BEE energy efficiency norms and scales its premium portfolio.
Geography mirrors this concentration: 94.3% India, 5.7% exports. The export number, small today, is central to the FY30 ambition. Management targets exports above 10% of revenue by FY30. It was 8.3% as recently as Q3FY25 before falling to 6% under commodity-driven channel dynamics and, more recently, geopolitical disruption. The recovery path runs through active distribution buildout in the US and Europe, and the structural China+1 sourcing shift that global buyers are increasingly acting on.
Distribution tells its own story: 69% B2B, 29% B2C. The institutional project business dominates today. The consumer-facing retail wire business anchored by the Etira brand, targeting Tier 3–5 towns at a 3–4% premium over unorganised competitors, is the growth aspiration. Etira now contributes ~15% of retail wire volumes, competing directly with the unorganised segment that still controls 40% of the wire market.
India Is Being Wired for the Next 20 Years
India’s infrastructure ambitions have a material requirement: an estimated 12–13% annual growth in wires and cables demand, roughly twice real GDP growth. Polycab has built its five-year roadmap: Project Spring, around outgrowing that at 1.5–2× the industry rate. The tailwinds making that target credible are structural, not cyclical.
Power and Infrastructure
Power T&D accounts for 30% of cable demand, and cable intensity in transmission and distribution projects runs at 15–20% of project cost, five times higher than general infrastructure. India’s RDSS scheme, renewable capacity additions of 34 GW in FY25 alone (87% from renewables), and grid modernisation commitments create multi-year procurement pipelines. Government infrastructure spending was up 20% year-on-year as of the latest management commentary.
The demand is not evenly distributed. Within cables, power generation uses 5–7% of the project value in cables; transmission and distribution use 15–20%. As India’s energy mix shifts toward renewables and grid reliability becomes a national priority, the intensity of cable demand per megawatt installed is rising, not falling.
Emerging Demand: Data Centres and EHV
Data centres represent an estimated ₹25,000–₹30,000 crore cable opportunity. Polycab has established a dedicated data centre vertical supplying power cables and optical fibre solutions, an early-mover position in a segment that did not meaningfully exist for Indian cable manufacturers five years ago.
On the EHV front, the company is expanding capacity from 220kV to 550kV at its Halol facility, targeting a ₹3,500 crore domestic market where roughly half of demand is currently met through imports. Operations expected by late CY27. At an asset turnover of approximately 3×, this is efficient capital allocation, a relatively modest investment targeting a high-value, import-substitution opportunity.
Defence and EV charging infrastructure are smaller but growing pockets. Special-purpose cables for defence contribute low single digits to revenue today but are expected to become one of the fastest-growing verticals as India’s defence indigenisation push accelerates.
The Wire Market: Still 40% Unorganised
The cable market is 85% organised, and Polycab already dominates it. The wire market is only 60% organised. This asymmetry is the opportunity. Organised market share in wires has expanded from 18% in FY19 to 26–27% in FY25, gaining on both the unorganised segment and smaller organised players simultaneously.
The mechanism is Etira. Launched two years ago to target Tier 3–5 towns at a 3–4% premium over unorganised competitors, it now contributes ~15% of retail wire volumes without diluting company margins. The brand gives Polycab a credible offering at every price point, from Green Wire serving premium Tier 1 developers to Etira, capturing first-time buyers of branded products in small towns. This tiered positioning, built on 200,000+ electricians and retailers in the distribution network and 34 warehouses enabling 24-hour replenishment, is structurally difficult to replicate quickly.
Three Problems Landing at Once
Q3FY26 delivered 46% year-on-year revenue growth, the highest quarterly revenue in company history. Volumes in the core C&W segment grew 40%, FMEG turned in its fourth consecutive profitable quarter, and nine-month operating cash flows crossed ₹2,200 crore.
Margins told a different story. With copper rising 21% sequentially, Polycab deliberately passed through only 75–80% of input cost increases to protect distributor relationships a strategy it had used in FY22 to similar effect, emerging with a higher market share. By early January 2026, channel inventory had normalised, and the full cost increase had been passed through.
What makes Q4FY26 genuinely difficult is that three distinct headwinds arrived simultaneously, not sequentially. Each is manageable in isolation. Together, they create a real near-term earnings risk.
Geopolitical Export Disruption
The Middle East contributed 20–22% of Polycab’s export mix in 9MFY26. The ongoing conflict disrupted logistics precisely in March 2026, which seasonally accounts for 45–50% of Q4 volume sales for any cable company. Export margins run above 15% EBITDA, well ahead of the company average. Any compression in export volumes hits the highest-margin revenue line at the worst possible time in the fiscal calendar. Underlying demand from the US, EU and Latin America remains intact, but the timing disruption is real.
New Commodity Pressure
While copper had stabilised after Q3, aluminium and PVC prices rose sharply in the last few weeks of March 2026 due to supply disruptions linked to the same Middle East conflict. Polycab’s material mix is approximately 55% aluminium and 45% copper. The pass-through mechanism exists, but there is always a lag. A new commodity cycle compressing margins in Q4 after the copper cycle had only just been fully passed through creates a second sequential headwind.
Domestic Execution Softness
Contractors have become hesitant to lift cables when they have limited visibility on feedstock availability for running gas-based tools. This is creating near-term softness in domestic execution that compounds the export headwind. The underlying end-demand from infrastructure projects, real estate, and private capex has not changed. But the timing of offtake has shifted, with pent-up demand expected to come through in subsequent quarters.
The View From Here
The underlying long-term demand for wires and cables in India is well-supported: infrastructure spending, grid modernisation, renewable energy buildout, and the gradual formalisation of the wire market together point to a multi-year growth cycle that is structural rather than policy-dependent. Some of the near-term overhangs that weighed on Q3FY26 have already begun to resolve: channel inventory has normalised, and the copper cost increase has been fully passed through.
What remains open is whether Polycab can convert that demand backdrop into earnings recovery at the pace the market expects, navigating simultaneous pressure on exports, a fresh commodity cycle in aluminium and PVC, and domestic execution softness, all in the seasonally most important quarter of the fiscal year. These are not permanent impairments, but they are real tests of the operational model.
Windmill Capital will continue to track how these developments unfold, specifically whether export volumes recover as Middle East logistics normalise, whether the Q4 margin picture confirms the one-quarter thesis, and whether Project Spring’s longer-dated targets remain on track. We will update our view as the evidence develops.
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Windmill Capital Team: Windmill Capital Private Limited is a SEBI registered research analyst (Regn. No. INH200007645) based in Bengaluru at No 51 Le Parc Richmonde, Richmond Road, Shanthala Nagar, Bangalore, Karnataka – 560025 creating Thematic & Quantamental curated stock/ETF portfolios. Data analysis is the heart and soul behind our portfolio construction & with 50+ offerings, we have something for everyone. CIN of the company is U74999KA2020PTC132398. For more information and disclosures, visit our disclosures page here.
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