Polycab India saw its stock price rise on March 13 after announcing that it had secured a massive contract worth ₹3,002.99 crore for the Bharat Net project in Bihar. The contract, awarded by Bharat Sanchar Nigam Limited (BSNL), strengthens Polycab’s presence in India’s telecom infrastructure sector.
Major Boost for Polycab India with Bharat Net Project
The agreement mandates Polycab India to oversee the design, supply, construction, installation, upgradation, operation, and maintenance of Bharat Net’s middle-mile network in the Bihar Telecom Circle. The contract is structured into two major phases—a three-year construction phase followed by a decade-long operation and maintenance (O&M) phase.
For the first three years, the company will focus on deploying the necessary infrastructure, ensuring that the network is set up efficiently. The following ten years will see Polycab handling the upkeep and enhancement of the system, a critical component to ensure seamless connectivity.
Financial Breakdown of the Contract
The total contract value of ₹3,002.99 crore is divided into three key financial segments:
- Capital Expenditure (Capex): ₹1,549.66 crore will be utilized for the initial construction and deployment.
- Operating Expenses (Opex): ₹929.79 crore is allocated to maintain and manage network operations.
- Additional Allocation: ₹523.53 crore is earmarked for upgrading the existing Bharat Net network infrastructure.
This structured financial approach ensures that both initial setup and long-term sustainability are addressed comprehensively.
Revenue Model for Polycab During O&M Phase
Polycab India will earn a steady revenue stream during the operation and maintenance phase. The payment structure is designed to increase over time:
- For the first five years, Polycab will receive 5.5% of the capital expenditure annually.
- In the subsequent five years, the O&M payments will rise to 6.5% per annum of the Capex value.
This incremental revenue model ensures profitability and sustainability for the company while maintaining high-quality services.
Stock Market Reaction and Industry Implications
Investors reacted positively to the announcement, pushing Polycab India’s stock price higher in trading sessions following the news. The company’s expansion into the telecom infrastructure domain aligns with India’s growing demand for digital connectivity, particularly in rural areas.
Bharat Net, India’s ambitious broadband initiative, aims to bridge the digital divide by providing high-speed internet access across the country. With government backing and private sector collaboration, the project is a cornerstone of India’s digital infrastructure development.
