C&W cos to lead durables sector

Investors in shares of Polycab India Ltd and KEI Industries Ltd are enjoying a dream run. The stocks have gained as much as 103% and 83% respectively in 2023 so far.

- Vineetha Sampath

It helps that the two consumer durables companies catering mostly to the cables & wires (C&W) segment are set for another strong quarter for the three months ended September (Q2FY24). Demand in this vertical continued to be robust led by the business-to-business sector and infrastructure spending. What is more, the price of copper, a key raw material, was up by 12% year-on-year in Q2, which is a plus for price realization. This is because the C&W industry can immediately pass on the increase or decrease in raw material costs to consumers.

Prabhudas Lilladher expects Polycab and KEI to clock year-on-year revenue growth of 14% each in Q2 led by the C&W business. In FY23, C&W segment accounted for 86-87% of the consolidated revenues of these companies.

Beyond Q2, copper prices are key to monitor. So far in October, copper price is down by 6% versus Q2. Nonetheless, the robust volume performance on the back of solid demand would continue to aid earnings in the second half of FY24.