Expect FMEG segment to be profitable in FY24 and deliver 10-12 percent margin by FY26: Polycab India

"See FMEG business EBITDA margin at 10 to 12 percent by FY26", says Gandharv Tongia, Polycab India in an interaction with CNBC-TV18. The fast moving electrical goods (FMEG) segment turned loss making at EBIT level in FY23 of Rs 5 crore, compared with Rs 20 crore profit in FY22.

The cables and wires makers declared its fourth quarter earnings on Friday, where revenue from operations jumped 9 percent to Rs 4,324 crore. Operating profitability grew 28 percent to Rs 610 crore, much better than the CNBC-TV18 poll was of Rs 547 crore. The operating margins improved 210 bps to 14.1 percent, while the estimates were at 12.6 percent. Net profits came in higher by 32 percent to Rs 428 crore, compared with the CNBC-TV18 poll of Rs 386 crore.

Also read: Polycab India Q4: Beats street estimates, Shares surge 5 percent on strong results

While interacting with CNBC-TV18, Tongia said that the FMEG business was weak due to the rejig that company did last year. It now expects the segment to deliver 10 to 12 percent EBITDA margins by FY26. For FY24, the FMEG segment is expected to be profitable.

In the cables and wires segment, guidance for EBITDA margin is maintained at 11 to 13 percent for FY24. In FY23, this segment witnessed a strong revenue growth of 18 percent, while margins at 13.1 percent exceeded the management's FY23 guidance of 11 to 13 percent and is also higher than 9.8 percent clocked in FY22. Furthermore, the company is facing competition in the B2C space. The company has merged two of its business verticals which aided growth in the cables segment.

Further, advertising spends of the company are higher than its usual and expect it to hover around 2 to 2.5 percent of sales for the combined entity.

After rising 5 percent on Friday, shares of Polycab India witness selling pressure on Monday with fall of 2.3 percent at 10:30 am.