हिंदी – Polycab India stock review

हिंदी – Polycab India stock review

Hello investors , my name is Sagar and in this video we’ll talk about Polycab India we will talk about their business model , financials and valuation Let’s start with their history and I will explain how did they become India’s largest cable and wire manufacturer In 1964, Mr. Jaisinghani had established a small electrical store , which dealt in various electrical products including fans, lighting, switches, and wires Subsequently, the family business was managed from 1968 by sons including Inder T. Jaisinghani ( current Chairman and Managing director ) They decided to open a manufacturing plant in 1970’s , primarily dealing with cables and this is how their journey started but they also took one more important decision in 2014 .They realized that a big part of their cables and wires were used for power transmission they decided to take this one step further and they entered the FMEG (fast moving electrical goods ) segment , where they manufacture lights , fans and switches . Let’s take a look at the management. As I mentioned earlier , Inder T. Jaisinghani is the Chairman and Managing director Mr. Ramakrishnan is the Chief Executive. His past experience is very interesting. He has worked for 12 years in Bajaj Electricals and 17 years in Asian paints. This is important because he can help them scale the FMEG business . The company expects to scale this segment rapidly. Let’s take a look at the business model. 86 % of their revenue comes from the cables and wire business but mostly all of their profits come from this segment because the other two segments are very small and the FMEG segment only started n 2014 so it will need more time As you can see in the image , this segment has been growing in double digits . The company is market leader with 12 % market share thanks to their superior quality You might be wondering the use of cables ad wires. They are used by many companies such as Reliance and Tata steel among others. One common example is power transmission. So when power is generated and delivered to any specific place , power cables are used. they are also used in big amounts for communication . Another common is example building wires, which is used in infrastructure they are able to make products according to their customers. I would like to highlight one point. In order to make cables and wires , you need a very big amount of raw material , which is imported . This is one of their biggest expense. In order to protect their profit margins , this company keeps revising the price of their end product every month according to the raw material prices The second segment is fast moving electrical goods or FMEG segment, which contributes 8 % to their revenue As I mentioned before , they started this segment in 2014 and they managed to make it profitable in just three years FMEG segment is very expensive in the beginning because you have to spend a huge amount of money in advertising so you can create brand awareness you also need to have presence in retail outlets and have the distributors ready and somehow this company made this segment profitable in just three years . Let’s take a look at their products. Fans contribute 50 % to this group and it’s growing consistently. They have various types such as including ceiling, table, wall, pedestal they also sell lights of various types such as consumer, parks, parking lots, lawns, pathways , billboards and they also manufacture and sell switches , which you use at home such as modular switches and recently they have also launched some solar products. As you can see in the image , this segment has been growing rapidly but their profits are very low as it’s expensive in the beginning and 6 % of their revenue comes from ” Other Income ” . A big part of this category is EPC ( engineering, procurement and construction ) Many times , when companies buy a big amount of cables and wires , they need some extra support with execution and correct management please keep in mind this is a very small segment and the company wants to keep it this way Let’s take a look at their financials. The company has 5628 crores of assets in their balance sheet The company has 2772 crores of liabilities but the actual borrowing or debt is just 191 crores . So why is the liabilities is so high ? When the company went public, they used the money they raised to decrease their long term debt So let’s understand why are their liabilities so high . For example , 407 crores is advance from customers This is income that is received in advance . It’s a liability because the company that received the money has not yet earned it and it has an obligation (a liability) to deliver the related goods or services in the future. so the actual amount of debt is very low let’s take a look at the income statement their revenue went from 5494 to 8049 crores in 2019 their profits went from 240 to 499 crores in 2019 their margins went from 4.3 to 6.1 % in 2019 let’s take a look at the valuation . The company posted 943 crores of free cash flow in 2019 free cash flows helps us understand the “real earnings ” of this company . This number is big high because usually the company has 200 – 300 crores of earnings I would like to highlight some important points . The cable and wire industry is highly competitive but the company is market leader and they are able to do very high volumes compared to other companies and they expect this segment to grow nicely because the Government is spending a lot in infrastructure and ” Housing for all 2022 ” the second segment is FMEG. The whole segment is valued between 50 000 and 60 000 crores . the company posted revenue of 600 crores last year so it’s just 1 % market share but this is also very competitive I wouldn’t like to invest now because their overall profit margins are in single digits and I want to FMEG segment to be higher because that will help them increase their margins drastically , in contrast to their current single digit margins So if you would like to learn how to analyze companies and get all the data like I did for this video or if you would like to learn how to value companies , I have made my own video format course where I teach everything if you would like to know more , I will leave my course link in the description below don’t forget to subscribe

71 thoughts on “हिंदी – Polycab India stock review

  1. does polycab wires have any competitive durable advantage over the ones of havells and other companies which gives it pricing power and change prices without losing customers?

  2. Loved your analysis. But can you also do a peer comparison to the end of the video so that we get an idea, what edge a particular company have over the others.
    Thank you

  3. Polycab have excellent quality products but they have strong copetetor like KEI which also have good quality product so that very thin line to increase pricing, but polycab could grab havells customer because of havells have higher pricing than polycab with aprox same quality and havells india have one big white elephant namely "LLOYD " which have heavi debt

  4. Doctor,
    I want to learn how do you analyze a company , how do you get an information and how do value a company..

  5. Doctor,
    Your number has 11 digits ( 34664028214) and telling that it is Invalid, how do I contact you? Please share your contact number

  6. Nice explanation … I would like to add one more point, one of the advantages which Polycab has is its large network of dealerships for its wire segment, which can be leveraged for FMEG segment for great potential in growth. I bought it when it fell down post listing and currently its 70% up …

  7. Could you please share your views on Ujjivan Small Finance Bank. This bank has a very high margin due to its small capital loan for short duration model. How do you see the scope of this business in the long run?

  8. Mai kab se is company ke video ka wait kar rha … Thankyou sagar sir ..
    I bought this share 587 rupees
    60% + growth this stock my portfolio

  9. Luv you sir aapne meri baat rakhi AAP jiyo 100 saal
    Nic video
    Thankyou so much

    Thankyou sir

  10. Hi Sagar,

    Which website would you refer for financial statements and from where did you know the actual borrowing is only 191 cr, Please let me know the sources which you use for financial information?

    ur numbers are different from moneycontrol website where i refer data from!

  11. What application do you use to invest in US stock market ……
    And if you are interested in Indian oil corporation then we want hear about it FROM YOU …..
    COZ I did my research and found the management attractive and also it has 11 refineries out of 23 in India ……and I guess crude oil will get stable ( raw material ) #it also provides dividends ….so I'm planning to buy my first stock as in IOC and IDFC FIRST …….

  12. mene is admi ko kabhi yeh bolte nai dkha ki me invest nahi krunga abhi… pta nahi yeh invest krta kisme h …. atleast make video on which people can invest.

  13. Superb , i aslo think about polycab..

    Please stand company review when ipo time like polycab , affell, hdfc amc,

    In future ipo sbi card, uti amc etc…

    Thank you very much for teach retail investor…

    God bless you for your help retail investor…

  14. Finally I got a perfect teacher here.. I was searching since last 2yr….i m really happy 👍..thnx to make videos on share market 🙏…..please keep it on

  15. I like that you always talk to the point👍.. Not creat extra story …you are amazing doctor… I'm feeling glad to be your followere here….. You are only here who provide best knowledge 👏👏👏…..

  16. Nice analysis. Thanks
    Please do the analysis of BLS International if possible. It is only one listed compony who is in business of Visa processing.

  17. I have noticed in all your video, when you analysis a stock , at the end of video, you say you do not invest in this stock. Sometime analysis a stock where you wish to invest. First of all take a stock to analysis , where there is a scope to invest you and me.

  18. thanks a lot Sagar for this, i have been requesting for it… Actually i had gone thr their yearly report and found many of the observations made by you. Points that i understood after watching ur vidoe was fMEG has good margin, but highly competitive and profit margin in cables/wires is single digit, which may not be very good… i felt raw material is major expense for them…but stock has doubled in past 2-3 months…wondering what is driving market to give this company such valuations…

  19. Your videos are superb. Please also post videos of companies in which we can invest immediately which will be more useful.

Leave a Reply

Your email address will not be published. Required fields are marked *