Polycab’s FMEG Revenue Doubles to ₹993 Crore: Can This New Growth Engine Justify Its Valuation?
Polycab India has traditionally been known for its leadership in the wires and cables industry. However, its fast-moving electrical goods (FMEG) business is emerging as an important contributor to growth, supported by rising demand for solar products, fans, lighting and other consumer electronics.
With a market capitalization of Rs. 1,15,757.76 crore, the shares of Polycab India Ltd were trading at Rs. 7,681 per share, down 0.22 percent from its previous closing price of Rs. 7,698.00 apiece. The stock trades at a P/E of 36.14x on a consolidated basis.
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FMEG Emerges as a New Growth Engine
In Q2 FY27, Polycab reported consolidated revenue of Rs.9,899 crore, growing 52.8% year-on-year, while net profit increased 42.9% to Rs.990 crore. EBITDA rose 39% to Rs.1,422.5 crore, although its margin declined from 15.8% to 14.4%. Polycab's FMEG revenue increased from approximately Rs.452.2 crore in Q2 FY26 to Rs.993 crore in Q2 FY27, representing consolidated segment growth of nearly 120%. During H1 FY27, FMEG revenue reached Rs.1,754 crore.
The more significant development was profitability. Segment EBIT increased from just Rs.2.2 crore to Rs.100.6 crore, taking its EBIT margin from approximately 0.5% to 10.1%.
For perspective, FMEG generated EBIT of Rs.54.8 crore during the entire FY26. Its operating profit in Q2 FY27 alone was nearly 1.8 times that amount, indicating a substantial improvement in earnings contribution.
Solar products have become the largest category within FMEG. Management disclosed that its solar business currently focuses on traded inverters rather than in-house manufacturing. This makes the sustainability of solar demand, competitive pricing and the segment's product mix particularly important.
Premiumisation is also supporting profitability. During the earnings call, management indicated that premium products accounted for approximately 33% of the fans portfolio and 38% of lighting products
Project Spring and FY30 Targets
Under Project Spring, Polycab aims to grow its FMEG business at 1.5–2 times the industry's growth rate while achieving an EBITDA margin of 8–10% by FY30.
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The Q2 FY27 operating performance already indicates considerable progress towards this profitability objective. However, management has retained its long-term guidance rather than extrapolating the exceptionally strong quarterly margin into subsequent years.
The distinction matters because expanding revenue and sustaining profitability are separate challenges, particularly as Polycab invests in distribution, advertising, product development and market penetration.
Can FMEG Offset Margin Pressure in the Core Business?
Even if FMEG sustains its current scale and profitability, it remains considerably smaller than Polycab's wires and cables business. Therefore, additional revenue expansion will be essential for FMEG to become a meaningful driver of consolidated earnings. Despite its sharp growth, FMEG contributed approximately 10% of consolidated Q2 FY27 revenue. The wires and cables division remained the dominant business, generating approximately Rs.8,377 crore in segment revenue and Rs.1,189 crore in segment operating profit.
Management expects the core division's medium-to-long-term EBITDA margins to remain within 11–13%, suggesting that its recent elevated profitability may moderate. Consequently, FMEG's expansion could provide an additional earnings cushion, but its current size is insufficient to fully offset a significant deterioration in the much larger wires and cables business.
Conclusion
Polycab's FMEG business is developing into a credible second earnings engine, with revenue more than doubling and quarterly segment profit exceeding its entire FY26 operating profit.
However, its contribution to consolidated earnings remains relatively small. At 36.1 times trailing earnings, Polycab's valuation appears to reflect more than FMEG's turnaround alone, including its established market leadership, profitability and strong balance sheet.
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FMEG strengthens the justification for Polycab's premium, but does not independently establish that the premium is warranted. Sustained segment growth, consistent operating margins and healthy returns on incremental investments will be necessary for earnings to catch up with the valuation.