Polycab shares fall 4% despite 33% Q1 profit surge
Polycab India posted a 33% jump in first-quarter profit driven by a doubling of solar product sales, but the stock dropped 4% as investors locked in gains from a prolonged rally.
Polycab India shares fell 4% on Thursday even after the electrical equipment maker reported a 33% year-on-year jump in net profit to Rs 797 crore for the quarter ended June 30, 2026.
Consolidated revenue surged 39% to Rs 8,210 crore, driven by strong demand in its core Wires & Cables division and rapid expansion in its Fast-Moving Electrical Goods (FMEG) segment. This dual-engine growth demonstrates that the company is not solely reliant on infrastructure spending for its cables. Earnings before interest, taxes, depreciation, and amortisation rose 32% to Rs 1,136 crore.
The company achieved an EBITDA margin of 13.8% and a net profit margin of 9.7%, attributing the improvement to better operational efficiency and a more favourable product mix.
The standout performance came from the FMEG unit, where revenue jumped 71% across all categories. Solar products drove this growth, more than doubling from a year ago to remain the segment's largest category. The FMEG segment's EBIT margin expanded to 8%, bolstered by operating leverage.
This puts the unit firmly on track to meet its "Project Spring" target of reaching 8-10% EBITDA margins by fiscal year 2030, a key metric for long-term shareholders.
Alongside the earnings, Polycab announced a final dividend of Rs 47 per share, totalling Rs 7,079.85 million, following shareholder approval at its annual general meeting on June 30.
Despite these fundamentals, the market reaction highlights the weight of recent valuation gains. The stock had already risen 25.12% over the past six months and is up 16.29% so far this calendar year. Over three and five years, the shares have returned 128% and 361%, respectively.
For market professionals, the selloff underscores a classic profit-taking dynamic rather than a deterioration in the company's underlying fundamentals. Polycab's ability to expand FMEG margins while maintaining double-digit growth in its legacy cable business suggests the structural transition in its revenue base is accelerating. The early achievement of mid-cycle margin targets indicates strong pricing power and cost control. Investors will now watch whether the company can sustain this trajectory as it scales its solar and consumer electrical operations.
