Polycab, RR Kabel, share price face the heat of copper price volatility in Q1

Stock Market today: Polycab India Ltd, R R Kabel Ltd,  others share price price may have gained 13-14% year to date , nevertheless have not impressed investors much with their Q1 performance. The Polycab Ltd share price is up just 1-2% in last one month, while R R Kabel share price price corrected by 0.3% since results on Wednesday post market hours.

For Polycab, Wires & Cables revenue grew by 11% YoY. Sharp commodity price movements led demand fluctuations in channel sales in later part of the quarter curtailed the positive impact of higher average commodity prices, said Polycab.

Margin decline of 220 bps YoY was on account of lower contribution from the higher margin international business as well as domestic distribution business, sadi the company.

For R R Kabel too, while revenue from operations increased 13.2%, the operating profit dipped 16.0% year-on-year and the operating margins at 5.3% were down from 7.1% in the year ago quarter

Rajesh Jain , Chief Financial officer of RR Kabel said that Copper price volatility impacted margins. The copper prices that rose sharply till May plummeted thereafter. This impacted performance. However Jain remains confident of acheiving 20% growth guidance in FY25 as well as ell as 60-80 basis points improvement in profitability. Jain says that second half is better for demand. Also Copper prices are likely to stabilize now.

Polycab too said that the demand momentum remains strong, with uptick in sales expected during the remaining part of the year.

Not surprising analysts have maintained positive view on these stocks.

Moilal Oswal Financial Services analysts said that "We are structurally positive on Polycab due to its leadership position in the Cable and Wires segment, strong growth trajectory, and healthy return ratios. They estimate Polycab’s Ebitda abd net profit to growth at net profit CAGR * (compounded annual growth rate) of 17%/16% over FY24-27

Analysts at Anand Rathi Wealth also model revenue an net profit clocking 16% and 14% CAGR over FY24-26 for Polycab, led by robust government and private capex, and an upswing in real estate.

R R Kabel performance was below estimates in 1QFY25 due to lower margins in cables and wires and higher losses in the FMEG segment, said Moilal Oswal Financial Services report. MOFSL has a a BUY rating on the stock, though it may revie it post the analysts concall

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