Two stocks on our radar are Havells India and Polycab India. Interestingly they have posted divergent results with a dismal performance from Havells and Polycab beating estimates. The basic difference between both companies is Havells is mostly retail and Polycab is B2B and retail, but largely B2B.
Though Havells India and Polycab India belong to the same sector -- electrical equipment manufacturing -- the sock and the financial performance have been anything but similar. Regarding stock prices, Polycab has seen a surge of around 80 percent in last six months, while Havells has actually declined by around 15 percent, which is evident in the Q3 performance.
The Q3 performance of both of these companies also differ. While Havells saw a revenue decline of 10 percent, Polycab reported strong revenue growth of 21 percent. In the cable segment, Havells has seen a decline of 13 percent while Polycab reported an uptick of around 20 percent.
Speaking about the compound annual growth rate performance of companies for the last 4-5 years, Havells has grown at a pace of around 11 percent over the last five years while Polycab has grown at around 12 percent. Even the margin expansion has been higher for Polycab versus Havells and ROCE.
Polycab is looking to expand their consumer durable business and Havells had a temporary blip this quarter. Maybe going forward they will be able to turnaround operations. But as of now, the performance is quite divergent for both these companies.