Polycab India (NSE:POLYCAB) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Polycab India Limited Q1 FY twenty twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Nient Maru, Chief Financial Officer, Polycab India Limited. Thank you, and over to you, Mr. Mahu. Good afternoon, everyone, and thank you for joining us. I hope all of you are staying healthy and safe. On this call, we shall discuss the Q1 FY twenty twenty seven results, which were approved in the Board meeting earlier today.

0:52 We will be referring to the earnings presentation, financial results and financial statements, which are available on the stock exchanges as well as on the Investor Relations page of our website. Joining me today from the management team, we have our Head Strategy and Investor Relations, Mr. Seshant Yagami. I am pleased to share that building on the momentum of last year, the company delivered another year of strong performance, underpinned by healthy revenue growth and profitability. Our performance reflects not only favorable demand conditions, but also the deliberate investments and strategic choices made over the past several years.

1:41 The Wires and Cables business maintained steady momentum, leveraging its market leadership and execution capabilities, while the FMEG business continued its trajectory of steady improvement supported by a richer product portfolio and a wider customer reach. The progress we are seeing today is a direct outcome of our commitment to building a more agile, scalable and future ready organization. We remain focused on operational excellence, disciplined capital allocation and enhancing customer value across every touch point. Looking ahead, we see significant opportunities across our markets.

2:29 Our priority will be to accelerate profitable growth, strengthen our brands, deepen the distribution and build the innovation and talent ecosystem needed to support the next phase of expansion. The global macroeconomic landscape continues to be shaped by ongoing geopolitical developments. Disruptions across energy markets and global trade routes, particularly around the Strait of hardwood mills, contributed to inflationary pressures during the first half of twenty twenty six. While oil prices have moderated from the peaks which we witnessed in April, they continue to remain volatile.

3:16 Given the fluid nature of the geopolitical environment, uncertainty around the energy prices, supply chains and global trade flows may persist in the near term. The IMF's latest outlook projects global growth approximately at 3% for 2026, supported by resilient economic activity and technology driven investment cycle, while global inflation forecasts have been revised higher. The renewed energy shock has pushed every major central bank onto a firmer footing. The Fed held rates at 3.5% to 3.75% in June, but turned notably more hawkish, expecting rates to rise later this year.

4:09 A similar stance was seen by the Bank of England, which held the rates at 3.75% to gauge the impact of the U. S.-Iran war. The RBI held its repo rate at 5.25%, taking a neutral stance, but flat accrued driven inflation and rupee volatility as the key swing factors for its next move. Against the global backdrop, India remains one of the strongest performing major economies globally. While the external environment has become more challenging, India continues to benefit from robust domestic demand, public investment, healthy credit expansion and increasing private sector capital expenditure.

5:01 Economic activity has remained resilient despite global volatility, reinforcing India's position as one of the fastest growing large economies in the world. Government led infrastructure spending, a broadening manufacturing base and sustained momentum in services continue to remain key growth drivers. While services and consumption are driving growth, the government CapEx is progressing well in the first two months of FY 'twenty seven at INR 2.51 lakh crore versus INR 2.21 lakh crore in April May of last year, reflecting a healthy 14% growth.

5:50 At the same time, the real estate sector and formalization trends across the economy remains supportive of medium term growth prospects. On the investment flows front, although foreign portfolio flows were impacted by geopolitical tensions and global risk aversion, strong domestic institutional participation helped sustain market liquidity. Overall, while the global environment remains uncertain, India's structural growth story remains firmly intact. A resilient domestic economy, strengthening investment cycle, a stable financial system and a continued policy focus on infrastructure and manufacturing provide a very solid foundation for sustained growth.

6:48 We remain confident in the medium term outlook for the Indian economy and the robust demand environment it continues to create for our business. Across the organization, our focus remains on execution excellence, translating strategy into outcomes and strengthening the foundation for long term growth. Looking ahead, our priorities remain very clear, sustaining growth momentum, strengthening our competitive positioning and continuing to invest in innovation, talent and capabilities. I would now hand over to Sushank to take you through the financial performance for the quarter.

7:37 Thank you, Neon. For the quarter ended 06/30/2026, we delivered another strong set of results, underscoring the resilience of our business model and the effectiveness of our execution strategy. Consolidated revenues grew by 39% year on year, supported by sustained momentum across both our Wires and Cables and FMEG businesses. Operating performance remained robust during the quarter. EBITDA increased by 32% year on year and the margins stood at 13.8%, reflecting an improvement of approximately 70 basis points sequentially over the previous quarter.

8:24 At the bottom line, we achieved our highest ever quarterly profit after tax of INR 7,967 million, representing a growth of 33% year on year. PAT margins for the quarter came in at 9.7%. Finance costs for the quarter were INR 800,000,000, while other income stood at INR $1,049,000,000. For a detailed understanding of these line items, I would request you to refer to Slide 17 of the presentation. Our balance sheet continues to remain strong with a net cash position of INR 39,900,000,000.

9:10 The average working capital cycle improved significantly to fifteen days in quarter one financial year twenty twenty seven, aided by a temporary increase in payable days due to the use of letter of credit for raw material procurement. As these effects normalize, we expect the working capital cycle to settle within our long term operating range of forty five to fifty days. Capital expenditure during the quarter amounted to INR 3,200,000,000, reflecting our continued commitment to building capacity and strengthening future growth drivers. Let me now move to Slide six and discuss the performance of our Wires and Cables business. The Wires and Cable segment registered a healthy 39% year on year growth during the quarter.

10:01 Within this, the domestic Wires and Cable business delivered an impressive 43% year on year growth, supported by robust market demand, effective execution across key channels and favorable commodity linked realizations. Volume growth for the quarter on a year on year basis was low to mid single digits, which was on top of a very strong base of Q1 of last year. From a category standpoint, wires grew faster than cables during the quarter. Channel sales also outperformed institutional sales, highlighting the strength of our distribution network. Regionally, the West remained the strongest contributor, followed by North, South and East, reflecting the broad based nature of our market presence across the country.

10:51 Our international business witnessed a decline on Y o Y basis, reflecting the impact of near term geopolitical developments. However, the underlying fundamentals remain strong and intact. We continue to maintain a healthy order book and remain confident of a strong recovery supported by a positive long term outlook. EBIT margins for the Wires and Cables business stood at 13.3%. Sequential margin improvement was driven by a favorable business mix and continued focus on operational excellence. Consistent with our Project Spring road map, we continue to maintain our medium- to long term margin guidance of 11% to 13% for this business. Turning now to Slide eight for our FMEG business.

11:42 The FMEG segment delivered another outstanding quarter, recording 71% year on year growth with strong contributions across all product categories. This marks the tenth consecutive quarter in which we have outperformed industry growth rates, reinforcing the strength of our business model and execution capabilities. Solar business, our largest category within the FMEG portfolio, continue to be the primary growth engine, delivering more than twofold growth year on year. The category continues to benefit from favorable structural trends, including the PM Surya Ghar Yojana state level incentive programs and increasing consumer adoption of renewable energy solutions.

12:29 We believe the long term growth opportunity in this space is quite substantial. The rest of the portfolio, including fans, lighting, switches, switchgears, conduit, pipes and fittings also delivered healthy growth. This was driven by continued strength in the real estate and construction sectors supported by our focus on product expansion, market development and deeper customer engagement. The profitability trajectory of the FMEG business also continued to improve. Having turned profitable in Q4 of financial year twenty twenty five, the business has steadily enhanced earnings while simultaneously investing in people, innovation, product development and brand building.

13:17 EBIT margins for the quarter were 8%, very much in line with the milestones laid out under Project Spring, where we target EBITDA margins of 8% to 10% by FY two thousand and thirty. Looking ahead, we remain optimistic about the long term prospects of the FMEG segment. Our strategic priorities remain unchanged to grow at 1.5x to 2x of the industry growth, while progressively enhancing profitability. Ongoing investments in distribution reach, product innovation and brand strength will continue to drive support sustainable value creation over the coming years. Moving on to Slide 10 for an update on our EPC business.

14:07 The EPC business reported revenues of INR 3,077 million during the quarter one financial year twenty twenty seven, reflecting a year on year decline of 11%, primarily due to the timing and execution cycle of projects. Despite the lower revenue base, profitability remained healthy at INR $338,000,000, translating into a margin of 11%. Over the medium to long term, we continue to expect sustainable operating margins for the EPC business to remain in the high single digit range. In closing, I would like to thank all our stakeholders for their continued trust and support. The quarter's performance reflects the strength of our diversified portfolio, disciplined execution and strategic investments across the growth platforms.

14:57 With that, we conclude our prepared remarks and we'll now be happy to take your questions. Thank you. Thank you. We will now begin the question and answer session. The The first question comes from the line of Andhirudh Pajoshi with ICICI Securities. Yes. Congrats to entire team for posting solid result. So two questions from my side. If you can indicate the price hike and volume growth in this quarter on a year on year basis.

15:51 And now considering the copper prices, how do you see the pricing working out for Q2? That is question number one. And secondly, in terms of accounting, as you alluded to earlier, acceptances have gone up considerably and which is included in payable days. So if you can quantify the actual creditors, the creditors for... The current creditors for CapEx, and the third, the actual acceptances. And as the acceptances are part of payables, whether the interest cost on the acceptances is booked through the expenses lines or is it included in finance cost? Just just as an accounting require that clear clarification? Yes. Thanks.

16:41 So, Anirudh, thank you. I think in your two questions you had four. We'll try and answer try and attempt all answering all. So firstly, the copper price, and in fact, the volume and price growth in this quarter. So I think I can give you volume growth trajectory, which is put together, cable and wire, our domestic business grew from about low to mid single digit volume growth. But we must note that the Q1 of last year, our volume growth was very, very strong. We had a base of about 26% volume growth cable and wire put together, where again cables was high and wires was again north of 20%. So on that base, this time we recorded low to mid single digit kind of overall cable and wire business growth, where again this time like we mentioned in the earlier part of the conversation where wire sales outpaced cables.

17:36 Okay? The copper price, I don't see we have any guidance on that for quarter two. We will continue to focus on business and price will, of course, be something that we can't control. It's like you are aware, we are it's a cost plus model, right. So whatever is the cost we'll pass it on and we'll continue to focus on the business, right. So that is I think the first question. Second question, I'll just briefly address by saying that so while acceptances have gone up, I think the groups are still in transit. So hence, if you look at typically the way we operate, the inventory is usually on a higher side, say around one hundred, one hundred and ten days, right? Using LTVs, we get payable days of around, say, eighty, ninety days. And it's only a play of that. And if you look at receivables, you must be aware our business happens 90% through channel, right. And majority of that again comes from channel finance. So our receivables are always low, but typically considering the other parts of business including EPC, we believe our receivables are usually within twenty to thirty days.

18:41 So if you put together these three pieces, you will always figure that we are somewhere around the average range we guide is forty five to fifty days, but this time we were on the better side and we ended up with fifteen days in this quarter. So I think more details into it, we can of course take it offline. Okay. Sure, sure. This is very helpful. And once again congrats to the team. Thank you. Thank you, Anurat. Thank you. Next question comes from the line of Sonali Salgankar with Jefferies. Please go ahead. Thank you, and congratulations to the team for such a strong performance. My first question is a little strategic in nature.

19:27 Would be nice to hear your thoughts on the upcoming data center opportunity or any opportunity in optic fibers that you see? And my second question is in terms of the exports. Now we understand that 13% decline, was it largely because of Middle East? And how do we foresee the coming quarters? Thank you so much, Sonali, for these two questions. So firstly, on the data center opportunity, I think it's a very big opportunity. We are hopeful that material translation should happen from estimates to reality. Today, I think the installed base is somewhere around 1.6 gigawatt. We've read reports where the estimation is somewhere around eight gigawatt to 16 gigawatt or 18 gigawatt. So we estimate that one megawatt translates into around INR 3.5 crore worth of cables with 50% to 60% being conventional and the balance being optical fiber.

20:26 So a sizable chunk of demand can come from data center. It's just a matter of timing. Definitely a 20,000 crores, 25,000 crore market is there, but that's over a period of maybe six, seven, eight years. We have, through our distribution channel, we have supplied majority chunk of the conventional piece in the existing installations. I think we've called out earlier publicly that in the data centers of Vodafone Idea in Mohali, Pune and South Of India, we've supplied the cables. So we continue to focus on that market. It's a dedicated focus area for us. And that, of course, is one such chunk of demand center, which can actually explode and create another layer of demand for cable and wire put together. So I think we definitely expect this to pick up in a bigger way. And like I mentioned, the opportunity could actually be from eight gigawatt to 16 to 18 gigawatt and that too over a period of five to eight years. We need to see how it translates into reality.

21:30 Okay. And on the second part, which was exports. So like you rightly mentioned, The Middle East got impacted in the month of March and certain geographies in Middle East continue to be impacted. But I'm happy to state that we've seen good amount of momentum coming back in exports. Today, we have very healthy order book. Our U. S, Europe and Latin America put together have a very sizable order book. Happy to state that even in Q1, we could do about 20%, 24% kind of a business from Middle East, which again came from countries like Oman, Saudi and UAE put together. Okay. And North America continued, I think the contribution from North America was somewhere around 45%, 50% in our Q1 turnover.

22:20 And of course, Europe was about 18%, 20%. So broadly, we've seen we've pretty broad based. Last year, we were happy to add 10 new geographies in our global footprint. And today, we believe that all of that is going to pay rich dividends in the time to come. Got it. Very clear. Thank you for the detailed answers and all the best to the team. Thank you, Sonali. Thank you. Next question comes from the line of Polkad Patni with Goldman Sachs. Please go ahead. Sir, thank you for taking my question. Just one question. This is on the Bharat net projects. Given how steep a price increase have we seen in the fiber side, how do you see the profitability of these projects spanning out over the next couple of years?

23:12 And also, we've seen that overall, the EPC revenue has been quite weak. Any particular reason that's impacted this revenue? So just that question. Sure. Thanks, Puget. So again, I think one was on BharatNet and the high fiber prices. So happy to state, I think the strength of our procurement is such that we've been able to secure the fibers for the execution period, which is next two to three years. So there is a INR 4,500 crore execution piece of the contract of INR 8,000 crore overall, right? So within that, whatever is the fiber piece, so overall supply portion is around 30% of the overall value, correct? So now for that portion, we've already secured the fiber.

23:59 So hence, we are technically not exposed to the high fiber prices that are happening today and completely appreciate the fact that the fiber prices are obviously on the uptick. But we've secured our fiber, hence we are not exposed or not impacted. And profitability like you mentioned, hence we've always guided that BharatNet which again forms part of our EPC business, the expected estimates are supposed to be high single digits, right? This quarter, if you believe, we've delivered EBIT of 11%, but we estimate that from a long term perspective, it should be high single digit. And also, I think since you mentioned that EPC has taken a hit in this quarter, I would say EPC business is the nature of business, wherein you shouldn't see on a two to three month basis, these are all milestone linked payouts, right? So if it's if the milestone happens, say, after a period of five months, then possibly revenue recognition will happen in second quarter and not in the first quarter.

24:52 So that's the only way. Otherwise, materially, if you see on a full year basis, you will not see hopefully a dip, Okay. And just I think one more you had a question on... Those are... Yes. Thank you so much for answering those. Thanks. Thank you. Next question comes from the line of Akshay Kwatani with UBS. Please go ahead. Hi, sir. Thank you for the opportunity and congratulations on great results. Sir, how should we look at full year volume growth? Like Q1, you highlighted a low to mid single digit volume growth on a high base. Q3, again, will have a high base. Q2 will have slightly, I would say, moderate base, then this becoming favorable in quarter four. So how should we look at full year volume growth for Polycab this year?

25:45 Actually, thanks for your question. So see, I think best way to look at it is look backwards. So if you look at Q4, we didn't have I think the industry didn't have significant volume gains. Q3 was maybe 40% for us. So similarly, on quarter, you'll have different volumes, but I think we've always guided that we'll do 1.5x of market growth, right, which is I think mix of both volume and value. So as long as there is growth in the volumes or growth in the market, we'll definitely do better than the industry growth rate. That is the only guidance we can give, right. But if you look back, I think like I mentioned, overall full year FY 2026, we did 18% volume growth, So I think over a period of ten to twelve months is a good time to look at a trend.

26:31 Two to three period, mean you will have only two to three dots, will not be able to draw a trend line. So I think ten to twelve months is a good period. I think maybe two, three next quarters you will see a trend and you should definitely see 1.5% of market growth. Got it. Thank you. And second question, on the wires growth this quarter. You highlighted wires have outperformed cables growth this quarter. So does this implies market share gain for Polycab India segment? And how much will be the market share, if you can quantify? Okay. We'll have to obviously wait for other results to also get public, right? Only then we can comment on that. And typically, we do this market share analysis or exercise typically again at the period of after ten to twelve month period like last year, in last quarter in fact we updated that overall we've gained 3% to 4% market share. I think quarter on quarter it may or may not be true because this should not be cyclical, right. I mean it should be at least structural gains, which can again appear only after eight, ten months and of course after peers have also declared the results.

27:29 Got it. Got it. Thank you, Sushman. Thank you. Next question comes from the line of Swaminathan with M. Despac. Sir, congrats on a good set of numbers, and thanks for taking my question. I would like to double click on the volume growth opportunity from the cable segment. How was the performance from transmission side this time? And how do you see the visibility, especially from solar side? Is there a possibility of further growth that can be there from that particular sub segment? And similarly, with respect to demand from infra and industrial, how it was in the first quarter and how is it likely to pan out? Are we seeing the recovery in demand from both infra and industrial side?

28:22 Ravi. Thanks for that question. So I think I'll just reiterate. So basically, 90% of our business happens through channel. So majority of the times, we don't get to know who's the end customer, okay? But of course, we have some estimates and assessments where we can give you some color. Not every quarter you will have a particular sector contributing. But overall, if you see, our sales, thanks to being the largest player in the cable and wire industry, our sales are very broad based. So it will be across the spectrum of demand. I'll just cite a few numbers, Ravi, and thanks for pointing this out that what is the traction in T and D space. See, overall generation side, I'm sure we are all happy with the developments that are happening on renewable generation, right? I think 55 gigawatts, 56 gigawatts were added in the last financial year.

29:14 I think under the national generation adequacy plan of government, I think by FY 'thirty six, we have to reach somewhere around eleven twenty odd gigawatts, where 70% of that has to come from renewable. So today solar is maybe around 150 gigawatt. It has to go up to almost 500 gigawatt plus. So substantial generation, maybe I think north of 50 gigawatt, 60 gigawatt every year will continue, right. So all of that will of course translate into significant cable demand. Second piece is the transmission and distribution. So if you look at period of FY 2020 to FY 2025, the average transmission line capacity addition was around 15,000 circuit kilometer. Okay. Now that has to substantially go up to about north of 20%, north of 20,000. So estimates are 20,000 or 21,000 circuit kilometer should be the average for period of FY '26 to FY 2030.

30:04 Now this year again, Central Electricity Authority, CEA has predicted that at least it will be 17,000 circuit kilometer in this financial year. Okay. So all of these are very, very good positive signs. I'm happy to state that 2,000 circuit kilometer has already been executed in April and May months. So we don't have number for June, but two months has already seen 2,000 circuit kilometer getting added. So it's a very real execution, which is visible. Even the M and A budget for last year, they were able to pump in INR 24,000 crore. So against their budget estimate, the actual spend was about 90 plus percent. So all of these are very, very healthy signs. If you look at the capacity addition plans of the transformer companies, they are pretty robust. If you look at CG Power, ABB, Siemens, Hitachi, they have very sizable capacity addition plans. All of them are targeting the huge P and D pickup that is going to come. And of course, AI and data centers are further going to propel this demand. So we are very positive, Ravi. I think that's going to continue.

31:07 Also on the private side, I think you mentioned, so thanks to again our distribution reach, we are able to aggregate demand at Tier two, Tier three, Tier four markets. Our distributors are able to cater to that demand. We've been fortunate to be able to cater to sizable private demand. And on a broad based basis, we expect that demand to kick in even strongly now that government budget strongly focusing on logistics, railway, corridors and stuff like that, which will further create the right environment for private CapEx to pool it. We have seen that BSC 500 companies ex BFSI, we've seen that they have committed somewhere around INR 11.6 lakh crore for next twelve to eighteen months in capacity enhancements and new CapEx, okay? So and majority of them are going into industries like metals, semiconductors, manufacturing and even renewable.

32:02 So if all of that come true, I think majority of these will translate into very strong demand for cable environment. We are yet to fully see the potential from defense, EV charging infrastructure, data centers, we can create another layer of demand altogether. So I think from demand side, we are reasonably assured. I think India is at a very sweet spot. And not just for this year, I think, Ravi, for the next two to three years, we are very positive about the demand. Next question comes from the line of Achal Lohade with Duvama Institutional Equities. Mr. Lohade, please go ahead with the question.

32:54 Lohade, please unmute yourself and go ahead with the question. Since there's no reply from the line, Mr. Lohar, you Yes, can promote please go ahead. Thank you. Yes. Sorry. So two questions. First, in terms of the volume growth, if you could call out base quarter number for cables and wires separately. You mentioned that wires has grown faster than cables in this quarter. So is there any element of channel stocking, which is kind of helped in this quarter end towards June month? That's my first question. So Achal, maybe let me address the first question, so which is the volume split between cable and wire. So wires, like I mentioned, outpaced cables. Wires was high single digit growth.

33:47 Again, at the cost of reiteration, I'm repeating that our volume base of last year Q1 was very, very high. Cables was almost north of 25%. Wires was north of 20%. So on that base, our wires recorded high single digit. Cables was low to mid single digit. Got it. And in terms of channel stocking, how is the channel stocking at this stage for wire? Also... So I think a very good way to look at it is the movement in copper and aluminum, right? So if you see in June specifically, I think it has plummeted. Both aluminum has gone down by maybe 18%, 20% I mean from point to point, right, first of June to June 30. And if you look at even copper has gone has substantially come down. So it had almost gone to almost 14,000 and then it came down to $13,102,100, right. So I think as soon as price tends to go up, the stocking happens. If price comes down, destocking happens. That's the usual trend in the channel and which is consistent anytime.

34:56 And hence, the answer to your specific question is that the stocking did not happen to the expectation. Of course, there is some stocking that happens because of a quarter end or a month end. But the compared to the regular estimate of our typical quarter, it was definitely impacted by the plummeting of raw material prices. So fair to say that the channel stocking is suboptimal? Would that be a fair way to look at it for our partner? For us, so again, here, suboptimal is very difficult for me to place it on record. Point being that, in our case, typically, stocking is healthy stocking is maybe about twenty, twenty five days, right? That may not be true for other peers because we are able to replenish them faster.

35:46 So yes, but we are expecting below expectation is a better way put it. Fair point. Secondly, in terms of the margins, now if I look at the mix in cable and wire, the mix will be in favor of wires in this quarter. But margin improvement Q o Q. So any and I think the ideally, the margin should have seen improvement further improvement. So I was just curious, is there any one off or any cost escalation, etcetera, which has kind of impacted the Q o Q improvement in the margin? Achal, I'll just put it this way that it's a factor of four things typically in case of us for defining the margins.

36:38 And one is the export contribution in the overall business, right? This quarter, again, the effect of West Asia gradually phasing out or at least I don't know, at least till last week, it was the effect was reducing or going in the right direction of resolution. So but this quarter, of course, had an impact on exports. So export didn't contribute meaningfully. Second is the split between wires and cables. Now wires was obviously higher. So that, of course, uplifted or supported our margins. Second is the channel versus institutional. So channel was higher and hence also that supported the margins. But the fourth, again, being the operating leverage. So exports contribution and the operating leverage possibly didn't go in the right way. So all of this, if comes together, then definitely we are able to at least support our margins in a good way. But at the same time also, Achal, I would put it that based on our long term or medium to long term guidance of 11% to 13% under project spring, we definitely want to operate there. And we are we believe that this is again a healthy range. Of course, all four things coming together will play a role in our defining the margins.

37:49 Perfect. Just one last question. In terms of The U. S. Export, if you could talk about the distribution revamp, where are we? And what kind of pickup are we seeing? And what was the growth in U. S. Exports on a Y o Y basis? So let me put it this way. This year this quarter, the mix from a mix of exports U. S. Was again 50%, okay? And overall, we've seen a dip in exports overall. So but North America continues to be a contributor to our overall exports. And second thing is on setup. I think setup is more or less complete. We had appointed market reps and that process is complete. I think we have thrown the right seats.

38:38 There's a very healthy order book, specifically from U. S. And we anticipate and there's a very healthy inquiry bank as well. So these two put together gives us enough confidence that in the coming quarters in this financial year, we should see sizable pickup in U. S. Export and overall exports also will definitely show a good uptick. Next question comes from the line of Ashish Kannuliya, Citi. We can't hear you, Ranju. So sir, I can hear you. So just my first question is on the pricing side and stocking.

39:25 So one, have you taken any like was there a price cut which was happened during the first fifteen days of July? And post that, did you saw a slightly better stocking given maybe towards the June end channel would have delayed some bit of a stocking in anticipation of the price cut? Yes. So I think we've taken some one price correction or rather price revision in the first fortnight. And we will see the translation into volumes gradually. And can you quantify please what was the price revision? I think about 3% to 4%. Sure. And second question is on the FMCG side. On the margin side, we have seen a very, very strong outcome.

40:13 So one, is it purely operating leverage head? Or on the gross margin side also, you have seen some improvement? No. So like I mentioned on the margins, right, so margins, again, there are four factors, which I just mentioned to HHL also. So wire obviously is a higher margin business for us. So, Sandeep, question was on FMEG business. Okay. Sure. So on FMEG, there are two or three big things which are kicking for us. One is the operating leverage, okay? And thanks to our low base, we have been able to deliver higher growth, and we've been able to gain substantial benefits from operating leverage. That is one big kicker. Second is the premium mix has gone up significantly.

41:00 In this quarter, we've seen premium mix going up to almost 25% in the overall FMG portfolio. In case of France, it has gone up to almost 33%. In case of lighting, luminary, it has gone up to 38%. So all of this put together, placing the right product in the right market and having strategies for respective regions and not planning their strategy for single product category. All of this and very solid on ground execution is resulting in a very solid top line growth, which is, of course, then supporting the operating leverage and the premium product mix has helped uplift the EBITDA margins in SMG. Sure. And just last bit on the EPC side, on a full year basis because quarter to quarter, the execution could vary. But on a full year basis, what kind of revenue or execution can we expect from RDSS and BharatNet?

41:53 So I can so Ashish, so like you remember, BharatNet, the overall order size is around INR 8,000 crore. Out of that INR 4,500 crore is the execution piece for new infrastructure and which is over a period of three years. We have started the execution sometime in last quarter in March. So we can safely say maybe one third of that should translate into revenue, maybe INR 800,000 crore may come from Bharatant alone. And RDSS, we had overall order book when we started the execution was around INR 3,002 and 50 crore, INR 3,250 crore. Today, I think we've recognized some of it, but overall put together BharatNet and RDSS, order book stands at around INR 10,900 crore. And again, in case of RDSS, since the execution piece is around for three years, we should expect about INR 800 crore in the translating into this year.

42:47 Sure, Sufan. Super helpful and all the best. Thank you, Ashish. Thank you. Next question comes from the line of Sameer Gupta with IIFL Capital. Congrats on a good set of numbers, and thanks for taking my question. Sir, first question is on the SMEGPs, taking it from Ashish. Now solar here is a big driver. Any color on the scale of this segment and sustainability of this growth? I remember one year back, this was a third largest category within FMCG, and now it is the largest, and it is still growing at 2x. So just trying to understand what kind of visibility we have currently on this momentum in solar.

43:37 Thanks, Sameer. So I think, you know, it's very much related to the government policies. The PM, Surya, Ghar, Yojana and the state incentives and central incentives for rooftop solar. So I think this solar inverter business for us is also driving the same momentum. We definitely see a strong trajectory of growth in the next two to three years in the same vein as the country is witnessing. And any color on what contribution it would be within FMEG? Will it be like 30% now or any color you can give there? So, Sumeet, I'm sure you are aware. We don't usually, by design, give a split of the FMEG basket. But I'm happy to state that, like you've mentioned, it's the single largest contributor, but it is still less than 50%, right?

44:24 I mean, I can tell you the descending order of the top line of the respective categories. It is solar followed by fans, followed by pipes and conduits in this quarter. And then you have switchgates and switches. Fans and lighting and luminaries, are clubbing together, is it? No. No. No. No. I mentioned a solar inverter followed by fans. Right? Then you have pipes and conduits. Okay. Then lights, switch gears, and switches. Okay. Lights, missed. Sorry, sorry. Fair, sir. Thank you. And on the FMEG XOS Solar, if you could just help me with the growth in terms of volume and price hikes for this quarter would be helpful. Please, Sameer, by design, we don't give a split of the FMCG respective portfolios.

45:15 But I'm happy to state, and I think I covered that in my earlier commentary, is that all six categories have delivered stronger growth than the market than the industry growth of the respective category. And again, has two, three elements, like I mentioned, which is premium mix, which has hedged not just top line, but also has hedged the bottom line. The segmental play with respect to right product in the right market. We've done that same counters where retail buyers are getting sold. We are driving switches and switches along with that. So a lot of these things are working out and all of them are delivering thanks to lower base, a very high growth for all six categories. Got it, sir. The idea for asking this question was that typically in consumer durables this quarter, typically there is an element of a low base because there was early monsoon last year and it's been a delayed summer this year or a delayed monsoon this year, plus there have been some bit of price hikes into the channel both in 4Q and 1Q. So just trying to gauge the sustainability of this growth.

46:23 That was the idea of asking the question. Any granular information here would be helpful even if you don't want to share the numbers. No, sure, Sameer. I appreciate your question. And like you rightly mentioned, I think the industry like fans, coolers, ACs, although we are not into ACs and coolers, but I'm saying all of this industry has benefited from the extended summer, And we too have benefited. And like you rightly mentioned, in case of fancy, for example, the new products with the new BEE norms when they launched in the market, of course, there was a 4.55% correction. That's not only for us, but for everybody. And similarly for other products, think, and since you come up with a new product every time, so the prices may not tally with the industry per se. Hence, we don't usually give a split and I think you'll appreciate that.

47:09 No worries, sir. Thank you. I'll take up follow ups later. Thank you so much. Thank you. Next question comes from the line of Naosha Chaudhry with Aditi Birla Mutual Fund. Please go ahead. Clarification on the data center and T and D opportunity. As you mentioned, megawatt translate to 3.5 of wire and cable demand. So INR 3,500 on one gigawatt and assuming in a best case, one gigawatt capacity comes in annually.

47:56 So it would generate INR 3,500 crore of wire and cable demand. And obviously, there will be some base last year as well. So with INR 3,500 crore of demand, how can it have a significant percentage growth impact on a time of INR 1 lakh crore? Same goes to T and D also. Last year, 12 to 13,000 circuit kilometer was the number, and future would be 13 to 15. So percentage wise, it is not going up much. So these two, how can it have a significant impact on the industry growth percentage? Just wanted to understand if I'm reading it correctly or not.

48:43 Nishad. Thanks for that question. So I agree on the first one and disagree on the second one. So first one, which was data center. So I think I kind of agree with you. I think if the addition only happens one gigawatt, then obviously, the translation to cable and wire requirement of the market will not be substantial. And I'm completely agreeing with you, right? And unfortunately, today we are sitting at a base of 1.6 gigawatt. But that has happened over a period of five, seven years. I think 2019 or 2020, maybe some capacity started setting up and it has taken some time to reach 1.6 gigawatt, right? And in the initial part of my commentary also, mentioned that when somebody asked me about data centers, we see opportunity of eight gigawatt to 18 gigawatt and we don't know how long it will take to get there, right? So of course, if it's a factor, right, if five gigawatt comes in tomorrow, then obviously the sizable portion will come of demand.

49:36 So I'm completely agreeing with you on that. So it's your guess versus mine. I'm yet to see that translation happening on ground with respect to data center capacity coming up. At the same time, let me also put forward that we have a decent order book. There are some establishments which are already about to start. They may or may not be at a very sizable number to translate into one gigawatt in a year, but definitely there is some movement happening and there's a good trajectory. But at the same time, giving a bullish number on that is something that is outside my purview. On the second piece of T and D, that is where I defer, I beg to defer. We've seen the last average of last five years, like I mentioned, was around 15,000 cubic kilometer, 14,000 to 15,000. So in last year's number, maybe you and I both can recheck. I think it's somewhere closer to 14,015 kilometers.

50:23 And the trajectory for the next five years as per CEA estimated somewhere around 20,000, 21,000 kilometers. This year itself in FY 'twenty seven, they are expecting around 17,000 circuit kilometer capacity addition. So definitely, there's a disconnect and this is a factual number, so we can all check. Secondly, thousand per kilometer has already been added in the period of April and May put together only in this financial year. Okay. So there is a good amount of trajectory. Also, the conversion, the execution has been very, very good. If you look at the government CapEx, which is some portion or substantial portion is going to power T and D, a good amount of conversion execution is happening.

51:08 So hence, there I defer. I think T and D is going to pick up in a bigger way. And the translation to cable environment, specifically in case of T and D is higher. So INR 100 will be spent on T and D translates to a cable requirement of about 15%. So which is very, very high. So we definitely estimate that the next five years is going to be very significant monumental for T and D and both GT and D, generation transmission and distribution put together. See, last five years, even with a target of 23,000 average, the achievement is 14,000. And now next five years target of roughly on an average 20.

51:54 In that case, if we achieve 15 on a base of 15,000 annually, so that that gives some in terms of percentage growth. So is there any other data point which you can give us to have some confidence on incremental growth from T and D for the sector should come in? No, sir. We are only going by the published numbers of Central Electricity Authority. Okay. So I think we are very confident. And also one more parallel, another lead indicator that you can refer is the capacity expansion plans of the transformer companies. And also if you look at their order book ratio of order book versus revenue that has gone up to almost 2.5x, 2.5x.

52:46 So order book is 2.5x of their revenue, okay. So which means there is substantial development happening on T and D front. And at the same time, even if the conversion execution is, say, x percentage, if it is 70, 80, 90, like I mentioned, the translation to cable and wire has been very, very high in case of T and D. Generation has been the major kicker in the last two to three years where a substantial amount of renewable capacity has gotten added. But to that, that momentum is going to continue and T and D is going to pick up the chain now. So that's my take, and I'm happy to agree and disagree on certain aspects. Thank you. Next question comes from the line of Keur Pandya with ICIC Prudential Life Insurance Corporation Limited. Please go ahead.

53:38 Thank you. Two questions. First, on the volume growth side. So you have guided for 1.5x growth versus industry growth. But I'm just saying from the perspective of absolute growth number, do you worry about lower growth for last two or three quarters in terms of volume? Is it just because of this or you see there is a deceleration in the momentum? And just, I mean, building on the previous discussion, all the data center or transmission of t and d CapEx, I mean, it can be by one or two years, and that can impact our volume growth. I'm not denying any risk to this T and D CapEx, but any delay can at least impact our growth rate. So are you seeing any deceleration?

54:32 So how do you dissect this lower growth numbers? That is first question. And second is on export side. Now, I mean, at least there better environment in The Middle East and some normalization of trade routes plus your regime in the distribution, how do you see or when do you see export growth picking up or at least for FY 'twenty seven? Yes, these are the two questions. Sure. Thanks, Keor. Firstly, on the volume growth. So I'll just narrate the same story, which is, say, Q4 of last year, our volume the industry volume growth were pretty moderate, right? Q3, we outperformed everybody and we registered 40% volume growth. Q1, Q2 had another story, respectively.

55:26 But if you look at full year basis, our volume growth was 18%, okay? So this year, again, Q1, again, at the back of West Asia crisis, which is appears to have come we have passed the peak and we are going in the right direction. And last week, again, some it's resurfaced between Iran and U. S. So all of that will continue to play. But three months may or may not be a good indicator. Like you see June, the prices of copper and aluminum shooting down. So stocking destocking continues to happen. But in our assessment, we've seen the CAGR of our volume growth has always been double digits in the last five to seven years. Okay. So quarter on quarter may or may not be a good indicator. You may have to look at a longer time period of at least a ten to twelve months to assess that. We are very confident on the demand side and that's true for I think all cable and wire operators.

56:18 And that's also true that that is why so much of competition is jumping into the sector because they see a significant potential, right? I mean, that's the only good thing that to take from that. So definitely there is volume growth which is going to come. We've guided that we'll continue to grow at 1.5x of market growth and we still believe in that and we've delivered that in the last one, one point five years ever since we've made that commitment. And we believe that will continue to happen till FY 'thirty. There are significant pockets of demand. So power, of course, we believe is going to drive the demand momentum, which has happened in the previous years as well. And more so now it will happen with greater push towards self sufficiency and energy security. Second is the manufacturing and private sector, which we believe is now going to come up in a bigger way.

57:06 Mobility again, wherein 10% to 12% demand for cables comes from mobility, where again we see railways, airports, seaports, roadways, highways. Annually, we've reached about 10,000 kilometers of road construction, highway construction every year. That's a sizable number. And 800 new one day virus are expected by 2030. So I think all of these will substantially add to the demand. Further, I think data center, defense, EV charging infrastructure, these are somewhere around 45% today, but they may explode and create another layer of demand. So demand is very much there. We believe that we'll be at the forefront of taking the lion's share of the demand. And on a full year basis, we should be able to live up to 1.5x of market growth and maybe even today. So on the volume part, I think I broadly addressed. I think we're not too concerned or worried about that at all, right? Secondly, if you look at exports, specifically U. S, definitely, I think the momentum is very much back.

58:06 The Middle East is also somewhat we've started catering to Oman, Saudi and UAE. And we see that we've sown the right seeds. We've entered 10 new geographies in the last year. Today, footprint is around in 94 countries. And we will definitely see a higher traction. Since export is India as a country is very under indexed. We believe that India has immense potential and more so for Polycab because we have the right approvals and right products and right availability guarantee. We assure that we'll be able to deliver higher growth and there is no specific target because it's an uncapped growth opportunity. We have given our guidance of going north of 10 of our overall top line by 2030. And that's one indication that our export growth should be higher than domestic. And we believe if there are no more trade barriers and it's a level playing field, today we are I think very well poised to leverage on that growth and that should reflect in the numbers I think in the coming quarters.

59:07 Understood. Just last one question. On the S and P side, you highlighted all the reasons for better margin. Now this is as high as your, say, FY 'thirty guidance. So I mean, this is one off or because of the seasonality or some other reasons? Or we should assume that you have reached your guidance earlier than what you had thought? So pure again, our guidance we've given clearly till FY 'twenty. Quarter on quarter, we have no seasonality. I mean, typically, industry is about seasonality, right? Fans will have a seasonality for sure. Light, of course, will have a seasonality. So all of this definitely have seasonality. But on top line basis, like we've guided, whatever is the market growth will deliver 1.5 to 2x of that growth. And of course, the ambition is that on a full year basis, we should be able to reach 8% to 10% of EBITDA margins on FMEG.

1:00:02 So currently, what you can read is a very, very good trajectory. If you look at last five quarters and today, we've come by leaps and bounds in the right direction, both on top line and bottom line front. Top line growth of 71% year on year is a phenomenal growth. And even EBIT by EBIT of 8% in FMG today with increasing focus on A and P spends is again a very, very commendable story. Sure. Thanks a lot. All the very best. Thank you, Kior. Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I now hand the conference over to Mr. Nient Maru for closing comments. Thank you all the investors for taking part in this call. We appreciate your questions and hope we have answered to your desire.

1:00:57 Hope to see you again in the next quarter. Thank you. Thank you. On behalf of Polycab India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.