Multibagger FMEG stock delivered negative returns in 2024; buy, sell or hold?

Multibagger FMEG stock delivered negative returns in 2024; buy, sell or hold?

Shares of Polycab India have delivered negative returns in 2024. The fast moving electric goods (FMEG) stock is down 3.67% this year. On the other hand, the multibagger stock has gained 71% in a year and risen 101% in two years. The stock of the cables and wire maker is down 8% from its record high of Rs 5722.90 reached on December 14, 2023.

On Tuesday, Polycab India stock ended flat at Rs 5264.55 against the previous close of Rs 5466.75 on BSE. Total 0.12 lakh shares of the firm changed hands amounting to a turnover of Rs 6.54 crore on BSE. Market cap of the firm stood at Rs 79,092 crore in the previous trading session.

Polycab India has a one-year beta of 0.3, indicating very low volatility during the period.

In terms of technicals, the relative strength index (RSI) of the stock stands at 63.6, signaling the stock is neither overbought nor oversold. Polycab India shares are trading higher than the 20 day, 50 day, 100 day, 200 day but lower than the 5 day and 10 day moving averages.

The stock has climbed 275% in three years and zoomed 704% in five years.

BNP Paribas is equal weight on the Polycab stock with a target of Rs 4330

In the March 2024 quarter, the brokerage expects a modest fall in EBITDA margin by 20 bps y-y to 13.9% primarily on lower exports year-on-year and pressure on the FMEG division margins.

According to the brokerage, key monitorables for the firm are near-term demand outlook for domestic wires and cables , going into the election season. Update on company’s transitioning to a distribution-led model in US. Profitability revival for the FMEG business and the change in company’s strategy.

Financial services firm Motilal Oswal has initiated coverage on the Polycab stock.

“We value Polycab at 50 times FY26E EPS to arrive at our target price of Rs 7,500,” said the brokerage.

Nirmal Bang has an accumulate rating on the stock with a target of Rs 5255 .

“Polycab continues to garner market share due to its aggressive marketing, a wide product portfolio and quick availability of products,” said the brokerage.

In the third quarter of the previous fiscal, Polycab reported a 15% rise in profit to Rs 416.5 crore against a net profit of Rs 361 crore in the December 2022 quarter. Polycab India’s revenue stood at Rs 4340.4 crore in Q3, up 17% against Rs 3715.1 crore in the corresponding period of the preceding fiscal.

Polycab India Limited is the country’s largest manufacturer of wires and cables. The company’s business operations span across India through 23 manufacturing facilities, 15 plus offices and 25 plus warehouses.

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