Polycab India closes with 22% premium at Rs 655 on the listing day

Shares of wires and cables manufacturer Polycab India had a stellar rally on April 16, the first day of trading on exchanges, amid strong market conditions and after healthy subscription.

The stock surged 21.7 percent to close at Rs 654.80 on the National Stock Exchange, against issue price of Rs 538. It hit an intraday high of Rs 667.80 and low of Rs 630.

At the BSE, shares closed at Rs 655, rising 21.75 percent after hitting a day’s high of Rs 667.55 and low of Rs 633.

The opening price was same at Rs 633 on both exchanges.

On the traded volume front, 22.43 lakh shares of the company exchanged hands on the BSE and over two crore shares on the NSE.

The company’s market valuation on closing was at Rs 9,736.31 crore on the BSE.

“We initiate viewpoint coverage on Polycab India with an upside of 18-20 percent from current levels,” Sanjeev Hota, Head of Research, Sharekhan by BNP Paribas told Moneycontrol.

He expects premium valuation to sustain led by Polycab India’s market leadership and brand advantage coupled with multi-product growth strategy.

Being the market leader in W&C space and accelerated growth in FMEG (fast-moving electrical goods) space, it augurs well for growth visibility and is expected to deliver 22 percent profit growth over FY19-21E. The company will be net cash positive by FY21E, Hota said.

Global investment firm Phillip Capital also initiated coverage on the stock with a buy call and target price at Rs 718, implying 34 percent potential upside from issue price.

The brokerage said with improving cash flows and balance-sheet strength, valuations will trade at a premium with W&C peers (Finolex & KEI), but at a discount to FMEG companies (Havells, V-guard). Higher valuation is mainly due to its market leadership in W&C and transformation into a multiproduct electrical company over the next 24 months.

The initial public offering (IPO) of Polycab India was subscribed nearly 52 times earlier this month.

The price range for the Rs 1,345-crore IPO was fixed at Rs 533-538 per share.

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