Cable companies to take cues from Polycab results; sales likely to decline

On Wednesday, the shares of all the cable companies closed lower on BSE. The fall was led by industry leader Polycab India, which fell as much as three per cent after the company reported a sharp decline in its revenue for the quarter.

Polycab's consolidated revenue dropped by nearly 50 per cent YoY at Rs 977 crore. The reason behind this can be attributed to the pressure on its core business of cables and wires. This segment contributes approximately 85 per cent in total revenues of the company. The company registered nearly 40 insignificant days in the first quarter owing to the lockdown. It’s worth noting that the company with a strong market presence has faced such a sharp decline then, the overall business challenges faced by all other players can be worrisome for the investors.

The cable sector is expected to take cues from results as the core fundamentals may have taken hit during the lockdown. Companies such as Finolex Cables and Universal Cables have reported 20 per cent and 10 per cent decline in sales, respectively, for the fourth quarter of the previous fiscal. During this quarter, the effective loss of business was not as severe as in the first quarter and despite that, its double-digit revenue declined. Hence, a further slide in the top line for the first quarter can be ruled out. KEI Industries, though, had reported a drop of just 0.02 per cent in the topline.

On Wednesday, Polycab India closed down by 3 per cent, Universal Cables down by 2 per cent, KEI Industries was down by 2.9 per cent and Finolex Cables ended down by 0.2 per cent on BSE.