Polycab India Limited (POLYCAB) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Polycab India Limited Q2 FY '27 Earnings Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I now hand the conference over to Mr. Niyant Maru, Chief Financial Officer, Polycab India Limited. Thank you, and over to you, sir.

Thank you. A very good evening to everyone, and thank you for joining us. I hope all of you are staying healthy and gearing up for the upcoming festive season. On this call, we shall discuss the Q2 FY '27 results, which were approved in the Board meeting held earlier today. We will be referring to the earnings presentation, financial results and financial statements, which are available on the stock exchanges as well as on the Investor Relations page of our website. Joining me today from the management team, we have our Joint Managing Director, Mr. Nikhil Jaisinghani; and Head of Investor Relations, data. Let me now hand over the call to Nikhil for his comments. Over to you, Nikhil.

Thank you, Niyant. Good evening, everyone. As we conclude the first half of FY '27, I am pleased to share that Polycab has delivered its highest about quarterly and half yearly revenue and profitability. This performance underscores the resilience of our operating model and the strength of discipline and execution across the organization. The Wires and Cables business continued to deliver robust growth, supported by healthy demand trends, strong market positioning and consistent execution. The FMEG segment continued to strengthen its growth rate. and recorded its seventh consecutive profitable quarter. Across the organization, we remain focused on execution excellence, translating strategic priorities into tangible outcomes while building a stronger foundation for sustainable long-term growth. Encouragingly, the initiatives under our strategic road map, Project Spring are progressing in line with plan and are already beginning to lead meaningful results reinforcing our confidence in both the strategy and our ability to execute it effectively. As we look ahead, our priorities remain firmly anchored on sustaining growth momentum although enhancing our competitive advantages and investing in innovation, talent and capabilities. With a strong foundation in place and clear strategic direction, we are well positioned to capitalize on the emerging opportunities and create enduring value for all our stakeholders. With that, I would now like to hand over to Niyant.

Thank you, Nikhil. While the global macro environment remains volatile during the quarter, we continue to believe that India remains one of the most compelling structural growth stories globally. Geopolitical tension, elevated energy prices, higher global bond yields and disruptions across certain international shipping routes have created near-term uncertainty across markets. However, India continues to navigate and grow supported by strong domestic demand healthy investment activity, accelerating infrastructure creation and increasing manufacturing competitiveness. The IMF, in its latest outlook, has raised India's growth outlook by 60 basis points despite higher global energy pricing, stronger economic momentum, robust services activity and sustained domestic demand. This confidence is reflected in the recent upward revision to India's growth outlook by several other global agencies. Domestically, GDP growth for Q1 FY '27, came in at 7.8%, underscoring the resilience of the economy despite an increasingly uncertain external backdrop. Global monitory conditions remained tight as central banks continue to combat inflation, resulting in higher quality rates and bond yields across major economies. In India, the Monetary Policy Committee, MPC, unanimously raised the repo by 25 basis points to 5.5% and shifted the policy stance from neutral to calibrated tightening, implying interest rate cuts are not anticipated in the near term. While the external environment remains challenging, India's strong domestic demand, robust banking system and sustained infrastructure investment continue to underpin the economic resilience. What gives us confidence is the breadth of growth visible across the economy. GST collections continue to remain healthy, growing by 15% year-on-year. In July, August, government capital expenditure remains significantly at higher levels, and bank credit growth continues to trend close to 15% to 20%. Power demand has remained robust, reflecting healthy activity across industrial, infrastructure and commercial sectors. The focus on infrastructure development continues, which is reflected in the government CapEx spend of INR 5.10 lakh crores during April to August 2026, implying an 18% year-on-year growth. The government has also approved another INR 1.9 lakh crores of capital outlay for green corridor Phase III, which includes evacuation of 135 gigawatts renewable energy and deployment of battery energy storage systems. All of this signals strong economic activity in India over the medium to long term. This structural growth drivers continue to reinforce the long-term opportunity outlined under the Project Spring. While the near-term inflationary pressures are facing due to macroeconomic situation, both urban and rural demand continues to remain healthy. while government support measures are expected to a broader consumption growth going forward. Importantly, India's revenue base remains predominantly domestic, which provides a degree of resilience in periods of global uncertainty. Continuing on the momentum the company delivered yet another remarkable quarter of strong performance underpinned by healthy revenue growth and profitability. Our performance reflects not only favorable demand conditions, but also the deliberate investment and strategic choices made over the past several years. The Wires and Cables business continued to see positive momentum, leveraging its market leadership and execution capability, while the FMEG business has outperformed the market, across categories, supported by a growing product portfolio and a wider customer reach. The progress we have achieved is underpinned by strong execution across our strategic priorities and continued investment in our group [indiscernible]. We remain committed to operational excellence, disciplined capital deployment and creating greater value for our stakeholders and customers across a free touch point. Looking ahead, we see significant opportunities across our markets. Our priority will be to accelerate our growth initiatives Been our brand, deepen distribution and build the innovation and talent ecosystem needed to support the next phase of expansion. To some up, our outlook remains unchanged, while commodity was, geopolitical development and logistics-related disruptions may continue to influence individual quarters, the structural drivers of the demand remain firmly intact and in place. We remain focused strengthening our market leadership position and investing behind the significant long-term opportunities emerging across infrastructure, energy transition, manufacturing, urbanization and exports. Now we would like to update you with reference to the ongoing proceeding with respect to Asier Metals that we that we have filed an appeal before the honorable National Company Law Appellate Tribunal, Principal Bench New Delhi and the honorable NCLT has stayed and kept in abeyance order of admission in its entirety, including that of it being a commercial dispute of INR 2.79 crores to set aside the order of admissions passed by NCLT and initiation of the Corporate Insolvency Resolution Process CIRP against the company. The company had gone for an early hearing on October 15, which is today, and we are of a reasonable opinion that we have argued well on the hearing and are reasonably confident and hopeful that we have a strong case with grounds on merit and the judgments may land in our paper. We continue to monitor the situation and follow the new process as per lot to get this result as quickly as possible. We do not expect any adverse or material impact on our financial or business operations arising from the site situation. I would now hand over to Aditya to take you through the financial performance for the quarter.

Thank you, Niyant. For the quarter ended September 30, 2026, we delivered an exceptional performance, reflecting the strength of our diversified business portfolio disciplined execution and sustained demand across our end markets. Consolidated revenue grew by 53% year-on-year, with all business segments contributing meaningfully to this growth momentum. The company continued to maintain a strong operational performance during the quarter. EBITDA increased by 39% year-on-year while EBITDA margins expanded by more than 50 basis points sequentially to 14.4%, supported by a favorable business mix and continued focus on operational efficiencies. Profitability remained robust with profit after tax reaching a record high of INR 9,900 million, representing a 43% year-over-year increase. PAT margins stood at 10% for the quarter, reflecting healthy earnings growth and sustained margin resilience. Our financial position remains very strong. Net cash stood at INR 45.2 billion as of September 30, 2026, compared to INR 29.4 billion a year ago. We also witnessed a further improvement in our working capital efficiency with the average working capital cycle reducing to approximately 11 days in second quarter fiscal '27. This was aided by higher payable days arising from the increased use of letters of credit for our raw material procurement. As these benefits gradually normalize, we expect the working capital cycle to trend towards our long-term operating range of 45 to 50 days. During the first half of the year, we incurred capital expenditures of INR 6.1 billion, reflecting our ongoing investments in capacity expansion, supply chain capabilities and future growth platforms. On a half year basis, I am pleased to share that H1 FY '27 marked the strongest first half performance in the company's history in terms of both top line and profitability. Revenue grew by 46% year-on-year, crossing a significant milestone of INR 180 billion. EBITDA increased by 36% year-on-year with margins remaining healthy at 14.1%, while profit after tax grew by year-on-year, translating into PAT margins of 9.9%. Let me now turn to Slide 6 and discuss the performance of our Wires and Cable business. The Wires and Cable segment delivered a strong quarter, recording 47% year-on-year revenue growth. Within this, the domestic Wires and Cables business grew by an impressive 50% year-on-year, driven by healthy demand conditions, strong channel execution and favorable commodity linked realizations. We delivered a volume growth of mid- to high single-digit range on top of a strong base from the corresponding quarter last year, demonstrating the underlying strength of demand. Within the portfolio, wires continued to outpace cable in terms of growth. Channel sales also grew faster than institutional sales, underscoring the resilience and effectiveness of our distribution-led model. From a regional perspective, the West remained our largest contributor, followed by the South, North and East, highlighting the broad-based nature of growth across markets. Despite challenging geopolitical environment, exports picked up strongly during the quarter as sales grew 17% year-on-year and grew 85% quarter-on-quarter. While exports accounted for a relatively lower share of overall revenues, the moderation in contribution is largely attributable to the significant faster growth in the domestic market, which expanded the overall revenue base. We continue to maintain a strong export order pipeline and remain confident about our long-term growth prospects of this business. EBIT margins in the Wires and Cables segment stood at 14.2%. Margins improved sequentially, supported by a favorable product mix and continued operational excellence initiatives. In line with our Project Spring road map, we remain confident of sustaining medium- to long-term EBITDA margins within our guided range of 11% to 13%. Turning now to Slide 8 and our FMEG business. The FMEG segment delivered a breakthrough quarter, registering a remarkable 124% year-on-year growth with strong performance across all major product categories. Notably, this marks the 11th consecutive quarter of industry-leading growth, reflecting the effectiveness of our strategy, execution capabilities and strengthening market position. Solar products, which constitute the largest category within our FMEG portfolio continued to be the primary growth driver, registering multifold growth during this quarter. This segment continues to benefit from favorable structural tailwinds, including the PM Surya Ghar Yojana, various state-level support programs and accelerating consumer adoption of renewable energy solutions. We remain highly optimistic about the long-term opportunity this category presents. The broader FMEG portfolio comprising fans, lighting, switches, switch ware, conduct pipes and fittings also delivered healthy growth. Performance was supported by sustained momentum in the real estate and construction sector alongside our focused efforts on product innovation, distribution expansion and deeper customer engagement. This segment also achieved a major profitability milestone with EBIT margins crossing the double-digit mark for the fourth time and recording a 10.1% margin during the quarter. Since achieving profitability in Q4 FY '25, the business has consistently strengthened its earnings profile while continuing to invest in talent, product development, innovation and brand-building initiatives. Looking ahead, we remain highly confident about the long-term growth trajectory of the FMEG business. Our objective continues to be growing at 1.5x to 2x of the industry growth rate, while steadily enhancing profitability. Investments in distribution reach, product innovation, category expansion and brand equity will remain central to driving sustainable value creation. Moving to Slide 10 and our EPC business. The EPC segment reported revenues of INR 6,171 million in Q2 FY '27, representing a healthy year-on-year growth of 53%. Segment profitability remained strong at INR 444 million, translating into an EBIT margin of 7.2%. Over the medium to long term, we continue to expect sustainable margins for the EPC business to remain in the high single-digit range, supported by disciplined project selection, efficient execution and a healthy order pipeline. In closing, I would like to sincerely thank all our stakeholders for their unwavering trust and continued support. The performance delivered during the quarter reflects the strength of our business model, the commitment of our teams and the success of our long-term strategic investments. As we look ahead, we remain focused on executing our growth priorities, enhancing operational excellence and creating sustainable value for all our stakeholders. With that, we conclude our prepared remarks, and we'll be happy to take your questions.

[Operator Instructions] The first question comes from the line of Kevin Shah with Aditya Birla Money.

Congratulations on a great set of numbers. So firstly on the margins. So if you see the 10.1% is already at the upper end of your project in target. So can you SP98230956 Highlight what are the key drivers behind and which of the segments are profitable, is it made only contributed by the solar segment? And would you be looking to revise your projects spend on this?

Thank you, Kevin, for your question. For the FMEG margin question, I think there are a few things that have worked for us in this quarter and probably the kind of initiatives that we have put together over the past few years, and those strategies are actually reaping benefits. Now definitely, scale has increased in this quarter. And as I mentioned in my previous comments, all segments in the quarter have actually grown by multi-folds, right, beating the industry growth rate. So that's very much a positive sign for us that all the categories are firing at all cylinders with kind of the strategy that we are implementing. So that's the first part. I think the scale definitely plays an important part and definite our operating leverage from here. The second part, I think, to answer to that margin expansion of to 10.1% is premium mix has also gone increased in this quarter for various segments. Today, if you see the fans mix is around 33% in the premium category and lights also now reaching at 38%. So all of this is actually contributing to the margin growth. And the other strategic thing that we have been doing in the segment for past a year or so is providing a more solution-driven approach for our portfolio, right? So today, as you see, we have been -- as we have already mentioned previously in various calls that the kind of strategy that we are putting together, especially in terms of the building verticals, these FMEG products are actually complementing to the way we are approaching the end customers, right? So it's the kind of [indiscernible] offering that we are doing, and it is creating benefits for us, right? So I think there's a scale. That is why you see the kind of margins that we have generated in FMEG. So all these strategies together is reaping benefits because if you see earlier also, our strategy was largely on pan-India business, right? Today, the strategy has moved regional specific. And given the kind of P&L strategy that we have for each segment that is driving a lot of profitability. The availability of the product in the market has improved various strategic initiatives that we have implemented our PolyRatna plans that we have put together in the market is also sort of complementing to it. So I think all of the synthesize is getting us the results for FMEG. To answer to your second question on the growth, I think when we started the Project Spring and we laid out our margin profile, I think it's for FY '30, right? So over the longer -- I believe we would end up in that kind of a range of 8% to 10% of the EBITDA margins. Today, we are already at an EBIT margin of 10.1%, which is very high. I would believe we would appreciate the kind of efforts that we have put together to get this segment turnaround in the way we have seen the results in this quarter.

Understood. And just a follow-up on the margins on while and cable margins also there has been a significant there. So can we say that this is mainly led by the channel mix improvement and what are the other drivers? And how much footprint do you see it as sustainable given the potential increase in the competition in the distribution channel.

So Kevin, I think the -- when you look at the margins overall, I think it's a confluence of 5 things that we have already highlighted in the previous call. It's definitely operating leverage has a play into it. If you see our margins -- overall margins have expanded around 90 basis points sequentially. So there is the operating leverage that is playing into this sector, right, in this segment. Definitely, the business mix is playing an important part. Wires have grown far more better than the Cables. So that's a high accretive margin business for us. Definitely, channel has also been better than institutional. So these are things that are very important. And if you see the kind of export growth that we are also having that is also sort of supporting to a certain extent. So I think we are very much happy the way we have delivered the kind of initiatives that we have put together and it is visible in the results at the moment. And it's 14.4% overall margins, we have Wires and Cables at 4.2% is a remarkable story, Kevin.

Understood. And secondly, in terms of the new supplier that is coming into the market. So do you know what is the downside is that you see to your projecting targets? In terms of the growth as well as margins.

So Kevin, you need to understand that the guidance that we provided is for FY '20, right? So it's a CAGR approach that we have taken in terms of formulating these growth rates, right? So you may see in some years, you will find the margins have actually gone in the high single digits. Some years you may find it at a very high margin, so the double digit. So I think we would like to be in that guidance range, I think, till FY '30, and that's how we continue to maintain our stance of our guidance.

[Operator Instructions] The next question comes from the line of Sonali with Jefferies India.

Congratulations on a very strong set of numbers. my first question is in cables and wires domestic. You have grown 50%. Overall, you have grown 47% revenues. Earmark what could be our volume growth? And what could be our value growth for that?

Thanks, Sonali, for the question. I think in terms of the volume growth, I think as I alluded in my previous comments that Cable & Wires definitely has grown really strongly for us in this half as well. In terms of the volume growth, I think overall, volumes have grown by mid- to high single digits. Breaking down into the Cables & Wires segment, I think Wires have grown in early double-digit growth in terms of the volume and cable has been in the mid-single digits. So that's the kind of breakdown that we have in terms of the volume.

So that's a great number considering our base of last year was very strong.

Yes. I mean thanks were highlighting that what I would like to reiterate the fact that last year, it was a very strong base right 18% volume growth and Cables have actually grown around 20%. So I think on top of it, we are growing at that kind of growth. We are very much happy.

Great. Sir, my second question is regarding your commentary on the IBP hearing today please correct me if I'm wrong in my understanding. But today, there was only argument, right? So the final outcome is not yet out. So do we have a next hearing date.

Just to give, I think, a clarity, I think the entire case has been heard today. And now probably we have to wait for the actual order, which has to come. So we will leave this matter here. We expect the order to be announced in whatever time I think it takes by them, sooner the better.

Understood. So no...

Arguments completed and the order is resolved.

I understand. So any time line or we'll just leave it to the time that they require?

I would not like to hazard a guess on the time line. But obviously, as a company, we would certainly do the best to see how fast we can get the order. Definitely, it's something which we will be focusing on.

Absolutely, sir. Very clear. Wish you all the best for the festive season ahead as well.

The next question comes from the line of Umang Mehta with Kotak Securities.

Congrats on a strong quarter. My first question was again on margins. You've done 15% ballpark EBITDA margin in Wires & Cables in the first half. Now I understand even is your long-term guidance. But from a second half or a more 1-year perspective, how are you looking at profitability? And also, if you can share some comments on the new entrant and what -- how are you kind of approaching or maybe looking to defend our shares.

Thanks, Umang. I think as I mentioned earlier, when you look at the margins, I think there are -- it's just a confluence of 4, 5 things that combine together. While your channel has to grow more than your institutional business, your Wires have to grow more than your Cables, right? And that's how -- so the mix plays a part here. And definitely, in this quarter, we have seen some kind of an operating leverage that has come into play. You would also note the fact that copper prices have also been very high of late in this quarter as well. So that's also kind of helping us to sort of get on an absolute basis, right, the value is on an absolute business. So I think -- overall, I think we are happy with the kind of margins that we are generating. Second half also looks very promising, and it's largely driven through the kind of demand that we're seeing right now. We are seeing healthy growth in the second half as well. And based on that, I think we -- the kind of initiatives that we are putting together as a Group in terms of each categories are reaping benefits for us. So I think -- we will continue to operate at a level. We would be happy to operate at the higher end of the guidance that we've given. But as you know, among there are different seasonalities. There are different periods of years where fluctuations will happen, and that is the reason why we stick to our long-term guidance for FY '30. Now coming to your question on the competition. UltraTech's entry, I believe that's the fear that you have been referring to. So the entry into a particular category of wire market today is a very small portion of our overall business, right? If you see the overall Cable & Wires business, the market is roughly around INR 1.1 lakh crores, right? And Wires is roughly around 30% of that market. Even in that market, 30%, 35% is still unorganized. So there is enough room and the kind of growth that we're seeing in this segment, there is enough room for 2 players to come and take some pie this year. But however, we don't any real competition in the near term simply because that was market is still a very small part of our over business. And the heat is on the ones who are wires heavy. So for us, [indiscernible] is operating at a very high margin. So I think if you look at the overall industry, the market is also going to grow in the next 2 to 3 years to around maybe INR 40,000 crores , INR 50,000 crores. And with that, the kind of CapEx that UltraTech has put into this industry. the kind of revenue guidance that they have given close to around -- potential of around 6 to 7x, it looks elusive at the moment, but I think that, again, is a very small part of the overall market. So I think we will wait and watch. There is an execution play over here. And we definitely acknowledge the big house and its capability. We will continue to sort of closely watch our competition as we have always done. And if you -- and just to highlight that over the past every year, we have already gained market share around 1% every year. Last year only we gained 3 to 4 percentage points. So I think we are doing the right things in the market. We are tapping the right basis. And then I think that's how we are going to approach as part of our projects.

Understood. Just a follow-up. So fair to say there is no action in terms of pricing or -- anything from your end, right, in response to...

We've got nothing as of now. We are moving ahead with our plans.

Sure. Sure. Got it. And just one, second one was on 2 growth markets. One was exports. Any outlook from a full year growth perspective? And second 1 was on data centers. So there's a big opportunity there. So anything you're looking to do on that side? Yes.

Yes. I think, Umang, good view I pointed out that exports is a very -- an untapped market for India purse, right? And it's a very important growth driver for us. It is doing exceptionally well for us. It is just that the geopolitical situation has dented some of the bookings for us. And obviously, there has been issues with the supply chain globally where shipping lines have actually moved ahead 10 to 12 days. So that's the kind of impact we are seeing. But if you look at our numbers, comparing with quarter 1 and what we have achieved in quarter 2, we have gained around 25% increase in our quarter-to-quarter right? So we are pretty much confident that we have a very strong order book in place. Big market for us, U.S., Europe, LatAm Asia all are contributing significantly to us, right? And if you see last year, today, I think today, we are at 94 countries, right? Last year, we added around 10 countries in our portfolio. So we have a very diversified base in terms of exports. So I think -- today, I think Chile, probably I would like to highlight that Chile was one of the countries that also contributed this time in our export revenue. So last quarter, if you see, Oman, Saudi had contributed significantly to our Middle East mix. So I think that's very encouraging to see that we are getting all kinds of demand from these economies and countries. So we are very happy with the kind of growth that we are seeing in exports. And we are very much confident with the kind of order book pipeline that we are having, exports is certainly going to pick up from here. I mean, obviously, there is a risk element of Mr. Trump, but yes, I think we are very much very confident on the growth prospects. No, sorry, I mean, commenting upon the data center thing. I think if you see I think data center definitely is a big market and a very big opportunity for everyone to crack, right? As we have already highlighted that we are working towards this segment as well. Our notion R&D team continuously works to find the right product and -- as you are aware, we are any which way supplying the conventional part of the data center, right? Today, if you see the market is around 1.6, 1.7 gigawatts of capacity in data center, right? Some reports have suggested it would go to 8 to 10 and some probably 15 gigawatts. So there are a lot of announcement that is happening both in terms of the private and in terms of the government side as well. But we will need to see the kind of execution that will happen. Yes, there are some pockets in the regions where private CapEx is adding and getting added in different regions megawatts, but I think data center is a very big opportunity for us. So I think we only believe the kind of capabilities and the distribution network and the kind of product portfolio that we have, we will certainly be able to sort of capture that market [indiscernible].

The next question comes from the line of Ashish Kanodia with Citi.

The first question is on the full year volume growth. How should we think about it? Because second half, especially if you look at the C base, that's very high. So from a volume growth perspective, do you expect like mid- to high single-digit volume growth on a full year basis. And within that, most likely, 3Q could be slightly soft and then 4Q benefits because the base will also be lower?

Yes. I think Ashish, you are rightly pointed that Q3, definitely last year, last quarter, we had a very high base, right, around 40%, 45% of growth that we registered in last year. So that base is going to be high in third quarter. But when you look into the volume growth, I think it's not right to look at it on a sequential basis. What we have called out already as an anchor to look into the volume growth at whatever the market grows, we will do 1.5x of that in Cables and Wires, right? So if the market -- if you look at the GDP [indiscernible] recently, it's a 7.8% growth, if that kind of market continues. The Wires & Cables definitely is going to grow at around 12%, 13%, and we will do 15% of that. So that's a long-term way of looking into the volumes. I think you should also look at more on a 10- to 12-month basis. I think quarter-to-quarter is not the right way to think about it. But so if you look into the 12-month trailing basis, we still, I think, believe we are doing a reasonable sort of volume growth over here.

Sure, Aditya. And second question on the EPC side of the business. I think, last time, you shared that overall, I think for [indiscernible] INR 800 crores to INR 1,000 crores and RDSS INR 800 crores to INR 1,000 crores execution this year. So just wanted to check, are you still working with the same number? Or do you think that the execution might improve and we might do better than what we have guided earlier?

I think you see the EPC -- the nature of EPC business is like it's all milestone based, right? So we will continue to sort of getting orders in terms of the 2 projects that we are doing in terms of BharathNet and RDSS. So I think EPC remains in a similar order book profile. Roughly the order book, I would say it is close to around INR 9,000 crores, INR 10,000 crores.

Got it. Got it. And just last one, between Wires and Cables, anything to highlight here, like what led Wires kind of outpacing Cables because from an underlying demand point of view, of course, you see more -- at a macro level, the demand drivers are much stronger for cables. So was it largely just because of maybe some inventory stocking at the channel level? Or was there any other reason why like Cables relatively grew slower than Wires?

Actually, I think the growth is largely coming from the demand that we are getting from the different manufacturing and the other mobility side of the space as well. The real estate market continues to be strong. It's not slowed down to that extent, if you see today's year-over-year number in terms of the launches, it's still up 4% as for the latest numbers, right? So today, we are serving the real estate market demand of 2024, right? 3.8 lakh units were sold and launched during that time, a similar number we saw last year as well. So I think the real estate market, which takes a major chunk of our manufacturing end market is reasonably strong and -- what happens is that you also should look at the fact that there is the government also putting a lot of initiatives and schemes in the manufacturing sector, right? You see the 8th pay commission is yet to come. That is we have to sort of add another layer of demand towards that because that's when the housing -- affordable housing picks up and that historically has been the case. So I think there's a lot of demand that is there in the real estate market as well. So wires are actually contributing to that side as well. It is very difficult to quantify the end market for Cable and Wire business simply because I think some of the buyers also act as an ancillary to the cable, right? It also moves to various different industries. So I think overall demand remains very, very much healthy and strong, and that is the reason we are seeing these kind of numbers in our quarter.

The next question comes from the line of Achal Lohade with Nuvama Institutional Equities.

Congratulations on excellent show. Two questions. first, with respect to the institutional segment, while obviously, most of our sales are through the distribution channel, but -- are you seeing any delay in uptake given the substantial increase Q-o-Q we have seen in copper aluminum prices? Has that been the case? And how are you seeing the impact of the sharp a decline in aluminum price in the last 2 weeks?

No, I think, Achal, we are not seeing any significant movement with that respect because if you see copper prices have only gone up 6% quarter-to-quarter, right? And Aluminum actually come down. So whenever that happens, there will be a restocking and a destocking event. Whenever these copper prices will increase, the restocking will happen. And usually, what will happen is that we will pass it on to the end customer for cable, we do it in a month and for wire every forth night. So that is the only play over here. And I think I think we have not seen any significant pickup in the inventories or channel stocking as of now because obviously, copper price is little at a higher level, but we are not seeing any meaningful deviation to what we have seen in this quarter.

Got it. The second question, this is on the balance sheet. If you could clarify. We see a INR 12.5 billion kind of line item in the cash flow statement, if you could explain the nature and if that is -- is there any one-off and this will get reversed in the coming quarters.