Cables and Wires — Q2'24 update

Polycab, KEI, Finolex, universal, apar, paramount and RR kabel covered

The cables and wire sector has demonstrated robust growth in both earnings and profitability. Notably, Polycab and KEI have stood out with remarkable earnings performance, even against a higher baseline, showcasing a substantial surge in their figures.

Paramount has emerged as a standout performer, delivering an impressive 269% year-over-year returns, while others, barring Havells, have witnessed returns in the range of 68% to 100%. It’s worth noting that all players in the sector have undergone a significant PE re-rating. (Due to Havells’ diverse portfolio encompassing sizable businesses, a direct like-to-like comparison may not be feasible.)”

The sector also saw a new listing of RR kabel. RR is the fifth largest player in the W&Cs market in India, with 5% market share. However, the market is pricing RR handsomely compared to the market leader polycab.

Sales and EBITDA growth comparison

Margin trends:

All the players except for universal were able to maintain their margins. Polycab maintained its lead over others having a lead of almost 200 bps. With no major raw material movement, the quarterly margins were quite stable.

Concall/Presentation updates by all the companies:

All the companies had 1 common theme — USA, EU , Middle East, the export market is extremely strong and a major contributor to growth. This has happened mainly due to infra revamp, new projects and renewable push. On the domestic front — power, railways, real estate and defense were the major contributors

KEI:

• Export sales in Q2 jumped significantly to INR249 crores, a growth of 79%.
• Opportunities in the United States and Europe due to power distribution and infrastructure spending, as well as the China Plus One policy
• KEI has certifications in place for the Saudi Arabia market and is focusing on making inroads in the oil and gas sector in Saudi Arabia

Polycab:

• Exports expected to be a significant revenue generator in the mid-to-long term.
• Wire and cable capacity utilization at 65–70%, can go up to 95%

Paramount:

• On a global level, the western region (USA) has demonstrated positive growth on both a YoY and sequential basis demonstrated by a strong GDP growth.
• We expect this demand to continue in upcoming quarters, leading to strong volume growth.

Apar:

• Continued focus on growth in the US market and participation in the Bharat Net project.

Finolex cables — Yet to do concall

QoQ sales data comparision: