Polycab IPO: Brokerage Views & Run up to IPO

This post on Polycab IPO tries to bring out consolidated brokerage views , subscription information, Grey Market Premium (GMP) and anchor investor information where applicable. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Polycab IPO or not.

Related Post: Polycab India IPO Review

Polycab IPO : Grey Market Premium etc.

  • 04/04/19 Kostak Rs. 700-800, GMP 80

Subscription: Polycab IPO ( x times)

Day 3 92.44 110.42 4.65 3.2 51.96
Day 2   
0.7 1.51 1.77 
Day 1 1.960.680.270.460.71

Polycab IPO: Anchor Investors

Polycab India raised Rs 401 crore from 25 anchor investors as per list indicated. List of Anchor Investors

Consolidated Brokerages Views on Polycab IPO

Angel: ” In terms of valuations, the pre-issue P/E works out to 16.7x its FY2019 annualized earnings (at the upper end of the issue price band), which is slightly lower compared to its peers like Finolex Cables (20.7x) & Kei Industries (20.x). Further, Polycab’s market leadership position in wires & cables segment, diversified product portfolio, strong distribution network & brand recall and proven financial track record are the key positives. Given the above favorable factors, we recommend Subscribe to issue. “

Capital Market: ” Score 48/100, As the FMEG business further matures and more and more products are added in the category, the leverage on the existing distribution network and economies of scale provides a good scope for margin improvement in the FMEG business. The issue is offered at reasonable valuations and offers margin of safety for investors.”

Dalal Street Journal: ” At the higher price band of Rs. 538, the offer is demanding a market cap to sales (FY18) of 1.14 times, which is lower than that of Havells that has current market cap to sales of 5.8 times. However, the other key player KEI Industry is trading at market cap to sales of less than one. In terms of PE, the offer is made at around 21.6 times its FY2018 consolidated EPS of Rs. 24.95 on a post-issue equity share capital of Rs. 148.64 crore of face value of Rs. 10 each. Havells is currently trading at a PE of almost 70x, while KEI industries is trading at a PE of 22.12x.
Looking at valuation matrices, we believe that the offer is attractively valued and you can subscribe to the issue.”

ICICIDirect: “At the IPO price band of | 533-538, the stock is available at a price to earnings multiple of 22x FY18 EPS. We believe the issue is available at attractive valuation, considering its leadership position in the wire & cable industry, low debt/equity (~0.3x) ,attractive return ratios (RoCE ~21%, RoE ~16%). We recommend SUBSCRIBE to the issue at the offer price. “

Prabhudas Liladhar: ” We recommend “Subscribe” rating to Polycab given 1) leadership with most versatile product range in cables and wires 2) strong distribution with 2800 distributors and over 0.1mn retail touch points 3) strong manufacturing base 4) diversification into premium FMEG segment with presence in fans, lighting, switchgears & switches and 5) likely reduction in working capital due to channel financing. “

Religare: “Polycab’s fundamental track record has been sound over FY14-18 with revenue and PAT CAGR of 14.2% and 42.8% respectively led by margin improvement (+150bps), higher other income and lower interest rate. We believe the strong performance of the company would continue on the back of positive industry growth prospects largely due to government
initiatives in power and infrastructure, an increase in industrial investment, a rise in consumer spending and an increase in exports of
wires and cables”

SMC : “ Polycab India manufactures and sells a diverse range of wires and cables and their key products in the wires and cables segment. The company is engaged in the FMEG segment, which has bright prospects ahead. Moreover, the LED lightning arena is in advance mode. On the issue pricing front, it is reasonably priced and its fundamentals are also good. Investor may opt the issue. “

SPA Securities: “Indian wire and cable industry is expected to grow at 15% CAGR by FY23. Company is going to invest 1100 crores for capacity expansion which will lead to increase in production of wire and cables. We believe that company will put more effort in improving their FMEG business in future. At the upper price band of INR 538, the issue is priced at FY18 P/E of 20.5x while the other listed peers Havells India limited, KEI industries limited and Finolex cables limited trades at FY18 PE of 70x, 22.4x and 21.4x respectively. We recommend SUBSCRIBE to the issue based on strong industry growth trends, leadership position & healthy financials.”

SP Tulsiyan website: “Market leadership, strong brand, promoter-cum-professional management, improving financials and attractive pricing make this issue of Polycab India a subscribe. ”

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering and Management. Iam also certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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