Polycab Stock Rises After Rs 3002 Crore BharatNet Deal with BSNL – Big Growth Ahead?

Polycab India’s stock surged 1.89% to ₹5,105.75 after securing a ₹3,002.99 crore Bharat Net contract with BSNL for Bihar’s telecom network. The agreement involves designing, supplying, constructing, installing, and maintaining the middle-mile network over three years, followed by 10 years of maintenance, with costs set at 5.5% per annum of capex for the first five years and 6.5% for the next five. The contract includes ₹1,549.66 crore in capex, ₹929.79 crore in operational expenses, and ₹523.53 crore for maintaining the existing network.

Morgan Stanley assigned Polycab an ‘overweight’ rating with a target price of ₹7,395, citing strong demand in the cables and wires sector and rising exports. In Q3 FY24, Polycab’s revenue surged 20.4% YoY to ₹5,226 crore, while net profit increased 10% to ₹458 crore. Operating EBITDA rose 26% to ₹720 crore, with an EBITDA margin of 13.8%, though total expenses grew 20% to ₹4,634 crore. The company’s management expects to surpass its FY26 revenue target of ₹20,000 crore ahead of schedule. As India’s largest wires and cables manufacturer, Polycab operates 23 plants, 15+ offices, and 25+ warehouses nationwide.

Polycab Stock Rises After Rs 3002 Crore BharatNet Deal with BSNL – Big Growth Ahead?

Polycab India Limited saw a notable uptick in its stock price, rising nearly 2% during Thursday’s trading session after announcing a significant ₹3,002.99 crore agreement with Bharat Sanchar Nigam Limited (BSNL) for the Bharat Net initiative in Bihar’s Telecom Circle. The company’s shares climbed 1.89%, closing at ₹5,105.75 on the BSE, up from the previous day’s closing price of ₹5,010.60. Early trading activity saw 5,838 shares exchanged, amounting to a turnover of ₹2.94 crore. This surge propelled Polycab’s market valuation to ₹75,758 crore during the session.

Project Scope and Financial Breakdown

As the designated project implementation agency, Polycab will oversee the design, supply, construction, installation, upgrades, operations, and maintenance of the middle-mile network under the Bharat Net program. The contract includes a three-year construction phase followed by a decade-long maintenance period. Maintenance costs are structured at 5.5% of the capital expenditure (capex) annually for the initial five years, rising to 6.5% for the subsequent five years.

The total contract value comprises three components:

• Capital Expenditure (Capex): ₹1,549.66 crore for infrastructure development.
• Operational Expenditure (Opex): ₹929.79 crore for project execution.
• Existing Network Maintenance: ₹523.53 crore allocated for sustaining current infrastructure.

Brokerage Optimism and Financial Performance

Global brokerage firm Morgan Stanley recently assigned an ‘overweight’ rating to Polycab, setting a price target of ₹7,395 per share. This bullish stance is driven by strong demand in the cables and wires sector during Q4 FY24 and the company’s expanding export footprint.

Polycab’s financial results for the December 2023 quarter (reported in 2024) further bolstered investor confidence. Net profit rose 10% year-on-year (YoY) to ₹458 crore, compared to ₹412.85 crore in the corresponding quarter of the previous year. Revenue surged 20.4% YoY to ₹5,226 crore, driven by strong performance across core segments. Operating EBITDA jumped 26% to ₹720 crore, with margins improving to 13.8% from 12.9% a year earlier. However, total expenses also rose by 20% to ₹4,634 crore, reflecting the company’s expanded operational scale.

Growth Trajectory and Expansion Plans

Management highlighted that the company is on track to surpass its FY26 revenue target of ₹20,000 crore ahead of schedule, potentially achieving this milestone within the current fiscal year. This confidence is backed by sustained demand, strategic contracts like the BSNL partnership, and diversification into newer markets.

Corporate Overview

As India’s largest manufacturer of wires and cables, Polycab operates 23 production facilities, supported by a network of over 15 offices and 25+ warehouses nationwide. Its extensive infrastructure enables efficient distribution and responsiveness to market demands, reinforcing its leadership in the sector.

Disclaimer: The above information is sourced from TimesWordle.com. Analyst recommendations and stock market forecasts are based on independent assessments, and investors should conduct their own research before making any financial decisions.