Analyzing Polycab vs KEI: Q1 Results & Management Commentary

Join CA Rachana Ranade as she dives into a fundamental analysis of Polycab and KEI industries, comparing their Q1 results, management commentary, and long-term guidance to determine which company is leading the charge.

  • Here are the 22 clean bullet points summarizing the video:
  • * Polycab's revenue comes mainly from wires and cables (84%), with FMEG (7%) and EPC (9%) being smaller segments.
  • + EBITDA margin up by 2.12% (212 basis points)
  • + PAT margin up by 1.6% (160 basis points)
  • + Wires and cables segment saw high growth due to government expenditure on infrastructure.
  • + FMEG segment had a muted performance due to a shorter summer season, but solar products saw a 2x year-on-year growth.
  • + EPC segment saw a sustainable operating profit margin with a high single-digit growth rate.
  • * Polycab expects an EBITDA margin of 11-13% for cables and wires.
  • * FMEG segment aims to grow at 1.5-2x industry growth, with an EBITDA margin target of 8-10% by FY2030.
  • * Polycab plans to spend around ₹6,000-8,000 crores on capex over the next 5 years.
  • * A significant portion will be spent in cables and wire segment for backward integration and FMEG.
  • * Polycab's export revenue is currently around 5.2% of total revenue, with the US being the largest consumer (around ⅓).
  • * The management expects exports to grow due to demand from data centers, power infrastructure, and other regions like Europe and the Middle East.
  • KEI Industries Analysis
  • * KEI Industries' revenue comes mainly from wires and cables (93%), with a pending order execution worth ₹3,921 crores.
  • + EBITDA margin down by 64 basis points
  • + PAT margin up by 31 basis points
  • * KEI has planned capex of ₹600-700 crores annually to maintain a 20% top-line growth.
  • * The company aims for an EBITDA margin guidance of 10.5-11%.
  • Polycab vs. KEI Comparison
  • * Polycab is the winner on most parameters, including:
  • + Revenue growth (26% vs. 25%)
  • + Profit growth (49% vs. 31%)
  • + FY26 revenue guidance (not provided vs. 18%+)
  • + EBITDA margin guidance (11-13% vs. 10.5-11%)
  • * Polycab has a higher average capex plan at ₹1,400 crores per year compared to KEI's ₹650 crores.
  • * Polycab's fixed asset turnover ratio is expected to be around 4.5-5.5, while KEI aims for a minimum of 3.

Source: CA Rachana Phadke Ranade via YouTube

❓ What do you think? What are the underlying strengths and weaknesses of Polycab and KEI that make Polycab seem like the better investment option? Feel free to share your thoughts in the comments!