The Polycab share price is on fire today. The stock has jumped over 2% intra-day and rallied over 23% in the last 1 month. But the party is likely to continue. A report by leading brokerage house Motilal Oswal states that the key cable sector stock could rally another 18% over the next 12 months.
Motilal Oswal has rated Polycab as Buy, as the stock continues to outperform its targeted growth trajectory, supported by strong demand momentum and ongoing market share gains. It has set a target price of Rs 9,600 per share. This implies an upside of nearly 18% from current levels.
Motilal Oswal on Polycab: Growth momentum intact
Polycab has gained meaningful market share so far this fiscal and has maintained a growth trajectory that is ahead of the industry. The company has reiterated its 1.5x industry growth target till FY30 under Project Spring.
Apart from these factors, Motilal Oswal also pointed out that “real estate demand remains strong, while affordable housing and the government’s City Economic Region push should further support wire demand.”
Strengthening global and local footprint
Unorganised players account for 40% of wires, and Polycab holds a 30% share in organised wires. The strong network of dealers and distributors (200k+ electricians/retailers), structured loyalty programs, and 34 warehouses enabling 24-hour replenishment are seen as key factors helping it.
Exports form 6% of revenue, and the company is targeting 10%+ by FY30. The reduced tariffs that the US and Europe offer amid the China+1 sourcing shift are expected to benefit the company. It is also strengthening its US distribution footprint.
As a result, Motilal Oswal remains “structurally positive on Polycab, supported by its leadership in the C&W segment, a favourable industry outlook, a strong balance sheet, and healthy return ratios, providing visibility for steady growth and capital efficiency.”
Margin gains on the anvil despite surge in copper prices
Another reason why Motilal Oswal is betting on it is its strategy in handling commodity price swings.
Polycab follows a “commodity-linked pricing mechanism with dealers, and this helps mitigate copper volatility; the spike constrained immediate price revisions, with Polycab passing only 70% of the increase while absorbing the balance to protect volumes and channel relationships.”
This is because copper, which accounts for 50-60% of raw material costs for Polycab, saw a price surge in Q3FY26. This materially increased costs and prompted dealers to front-load purchases, pushing inventory to 40-45 days from 21-24 days.
Now, since “demand remains strong, higher inventory has been consumed within 20 days of January. Further, the company also passed on the entire cost increase, which is likely to drive margin recovery in FY26.”
Its strong distribution system, with 34 warehouses, is also positive, as per Motilal Oswal. The brokerage house pointed out that it helps in better planning of inventories and replenishing inventory within 24 hours.
Latching on to the premiumisation play
Additionally, Polycab is also targeting margin expansion through premiumisation. Most of the electric goods portfolio, including fans, lighting, switches & switchgear, conduits & accessories, and solar/appliances, is profitable.
Margins are expected to improve through scale and premiumisation. “The company targets FMEG growth at 1.5-2x industry growth, driven by distribution expansion and premiumisation, and aims to achieve an EBITDA margin of 8-10% in this segment by FY30 through operating leverage and improved product mix,” Motilal Oswal added.
Conclusion
Overall, Motilal Oswal reiterated the Buy rating on the back of steady growth in market share coupled with margin expansion. It is betting on the company’s premiumisation focus to future-proof profitability.