Shares of Polycab India, a leading wires and cables manufacturer, surged over 4% on Wednesday as the company emerged as the lowest bidder for a major Bharat Sanchar Nigam Limited (BSNL) project. This announcement has strengthened investor interest, further enhancing the appeal of share market investment in Polycab's stock.
The stock climbed to ₹6,910 per share on the National Stock Exchange (NSE), marking a 4.18% increase. By 11:05 am, the share price settled at ₹6,801.5, a rise of 2.6% from its previous close. On the Bombay Stock Exchange (BSE), Polycab's shares traded at ₹6,803.7, reflecting a similar 2.6% uptick. This price movement pushed Polycab's market capitalisation to an impressive ₹1,02,301.67 crore.
Polycab secures ₹4,099 crore BSNL contract
Polycab's recent achievement as the lowest (L1) bidder for BSNL's substantial ₹4,099 crore project is a milestone for the company. This project involves the development, upgrading, and maintenance of a middle-mile network under the Bharat Net initiative. The contract, following a Design, Build, Operate, and Maintain (DBOM) model, will span three years of construction, with maintenance duties extending over a decade.
For the maintenance phase, Polycab will receive an annual compensation of 5.5% of the capex for the initial five years and 6.5% per annum for the subsequent five years. This long-term engagement positions Polycab for sustained revenue streams, a factor that many investors find encouraging in their share market investment strategies.
Polycab's Q2 financial performance: Steady growth amidst competition
In its latest quarterly financial report, Polycab announced a 3.4% rise in consolidated net profit to ₹439.8 crore for Q2 of the current fiscal year. This is a modest increase from ₹425.5 crore in the same quarter last year. The company's revenue from operations witnessed substantial growth, increasing by 30.4% to ₹5,498.4 crore from ₹4,217.6 crore in the previous year.
The EBITDA margin for the quarter stood at 11.5%, reflecting intense competition within the wires and cables sector. This margin, though slightly lower due to market pressures, showcases Polycab's resilience in delivering consistent results.
Polycab's management anticipates continued growth
In a statement addressing the company's quarterly performance, Inder Jaisinghani, Chairman and Managing Director of Polycab India, shared optimism about the company's future. "We have concluded the first half of the financial year on a strong note, delivering our highest-ever second-quarter and half-yearly revenues and profit," he said. He attributed this growth to robust market demand and expects this momentum to continue, bolstered by government spending, increased investments from private entities, and a thriving real estate sector.
Jaisinghani's confidence signals promising future growth, making Polycab an attractive option for share market investment.
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