Jefferies Raises Polycab Target Price to Rs 10,920 Amid Growth Surge
Polycab India shares surged up to 4% on Wednesday following a bullish update from international brokerage Jefferies, which reiterated its 'Buy' rating. Despite a significant 30% rally in 2026, the brokerage has raised its target price to Rs 10,920, forecasting a further upside of 14% from current market levels.
Dominating the Organized Cables and Wires Market
A primary driver for Jefferies' optimistic outlook is Polycab's aggressive expansion in the Cables and Wires (C&W) segment. The company has demonstrated remarkable market share gains, with its organized market share climbing to 30-31% in FY26, up from approximately 18% in FY20.
The C&W segment remains the backbone of the company, accounting for nearly 87% of FY26 revenue and delivering 33% year-on-year growth. This growth was fueled by an 18% increase in volumes and 16% price-led growth. Notably, the launch of the 'Etira' brand in tier 2 to tier 5 markets has allowed Polycab to effectively capture market share from unorganized players.
Capitalizing on the Data Centre and Digital Boom
Jefferies identified data centres as a massive emerging growth lever. Data centres require significantly higher cable intensity compared to other sectors; cables account for an estimated 8-10% of total data centre capex, whereas they represent only about 3% in standard industrial projects. Polycab is already strategically positioned in this space, participating in data centre projects for Vodafone Idea through Vertiv, making it a key beneficiary of India's digital infrastructure expansion.
A Robust Order Book and Infrastructure Tailwinds
Polycab maintains a formidable order book, standing at Rs 11,300 crore as of March 2026. A significant portion of this pipeline is driven by government-led initiatives such as RDSS and BharatNet. The BharatNet project alone offers an estimated revenue potential of approximately Rs 8,000 crore (excluding GST).
Looking ahead, the company is expanding its manufacturing capabilities with a new extra-high voltage (EHV) cable plant, which is expected to be commissioned by the end of CY26, with revenue contributions starting from FY28.
Diversified Revenue Streams and Financial Strength
The company’s resilience is underpinned by a highly diversified revenue mix that mitigates concentration risk:
- B2B Segments: Power, oil & gas, and data centres account for roughly 35% of sales.
- Government Projects: Power and mobility initiatives contribute about 30%.
- B2C/Housing: Demand from the housing sector contributes 20-25%.
- FMEG & Exports: Fast-Moving Electrical Goods account for 10%, while exports contribute 6%.
Crucially, Polycab maintains low customer concentration, with the top 10 customers contributing only 21% of total sales.
Future Earnings Outlook
Jefferies expects Polycab to deliver an impressive Earnings Per Share (EPS) CAGR of 22% between FY26 and FY29. This growth is expected to be driven by sustained volume growth in the core C&W business and margin improvements within the FMEG segment. While risks such as copper price volatility and housing demand slowdowns exist, the brokerage has increased its target valuation multiple to 41x earnings.
Key Takeaways
- Market Leadership: Polycab has nearly doubled its organized market share in the C&W segment from 18% in FY20 to over 30% in FY26.
- High-Growth Sectors: The company is positioned to benefit from the data centre boom and massive government infrastructure projects like BharatNet.
- Strong Financial Forecast: Analysts project a 22% EPS CAGR through FY29, supported by a diversified revenue model and a robust Rs 11,300 crore order book.