Polycab's margin recovery masks a year-on-year squeeze
Costs grew faster than revenue year on year, while the stock's post-result decline became much larger than its usual move.
Filed 16 Jul 2026, 13:59 IST · Polycab India Ltd (POLYCAB)
Key takeaways
- Consolidated revenue grew 39.01% year on year, but expenses grew faster at 40.11%, narrowing operating margin by 0.68 percentage points.
- Operating margin recovered 0.74 percentage points sequentially as expenses fell 8.17%, ahead of the 7.39% revenue decline.
- The stock fell 4.96% by the next session, a sharper move than its 1.4% median absolute reaction after the last eight results.
Price around the results
Growth remained high, but profit conversion weakened
Consolidated revenue rose 39.01% year on year to Rs 8,209.73 cr, while net profit grew 32.84% to Rs 796.65 cr. The slower profit growth reflects the operating margin narrowing by 0.68 percentage points, with interest expense also rising 56.11%. Other income contributed 9.91% of pre-tax profit, so reported earnings included a meaningful non-operating component.
Sequential margin recovery came despite lower sales
Revenue fell 7.39% sequentially, but expenses declined faster at 8.17%, lifting operating margin by 0.74 percentage points. The tax rate also fell by 0.41 percentage points, supporting the 1.41% sequential increase in net profit despite a 2.16% decline in operating profit. The lower tax rate therefore helped offset some operating pressure.
Margin improved for a second quarter but stayed below peers
Operating margin rose from 12.65% in Q3FY26 to 13.10% in Q4FY26 and 13.84% in Q1FY27, marking a two-quarter recovery from the trough. It remained 1.25 percentage points below the 15.09% median for the 16 Industrials peers that had reported, placing Polycab eighth from the bottom.
The market reaction was unusually negative after the first day
The stock fell 1.17% on the result date, close to its 1.4% median absolute move across the last eight result reactions. The decline extended to 4.96% by the next session and 4.18% after five sessions, while the historical pattern was down in five of eight instances.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹8,210 cr | ₹8,864 cr | -7.39% | +39.01% |
| Other income | ₹105 cr | ₹60 cr | +73.65% | +31.25% |
| Expenses | ₹7,074 cr | ₹7,703 cr | -8.17% | +40.11% |
| Operating profit | ₹1,136 cr | ₹1,161 cr | -2.16% | +32.49% |
| Operating margin (%) | 13.84% | 13.10% | — | — |
| Interest | ₹80 cr | ₹75 cr | +7.21% | +56.11% |
| Depreciation | ₹103 cr | ₹98 cr | +5.18% | +20.04% |
| Profit before tax | ₹1,058 cr | ₹1,049 cr | +0.85% | +32.18% |
| Tax | ₹262 cr | ₹264 cr | -0.80% | +30.21% |
| Net profit | ₹797 cr | ₹786 cr | +1.41% | +32.84% |
| EPS (₹) | ₹52.09 | ₹52.18 | -0.17% | +32.34% |
Operating margin of 13.84% compares with a Industrials sector median of 15.09% across 16 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -1.17% | -1.15% |
| Next session | -4.96% | — |
| 5 sessions | -4.18% | -3.31% |
Volume on the results session was 2.05× its 20-day average.
What to watch
- Whether operating margin holds above 13.84% after its sequential recovery.
- Whether expenses continue to grow more slowly than revenue, reversing the year-on-year gap of 40.11% versus 39.01%.
- Whether other income remains around or below 9.91% of pre-tax profit.