Shares of Polycab, KEI Industries, RR Kabel, Havells and Finolex Cables witnessed a sharp decline on Thursday following UltraTech’s foray into the cables & wires (C&W) space.
UltraTech stock also saw a 6 per cent drop after analysts predicted a slight negative reaction to its entry into the C&W space, as investors have traditionally viewed the company as a pure-play cement firm.
Motilal Oswal stated that other players in the sector may experience a de-rating in valuation multiples.
Nuvama Institutional Equities remained positive on KEI, Polycab, and Havells in the industry, highlighting that UltraTech’s entry is unlikely to impact the FY25–28 earnings of C&W players significantly. However, they added that there might be a modest impact, at best, in FY28 or beyond.
The brokerage projected a balanced demand-supply scenario in the industry over the next few years.
Meanwhile, ICICI Securities expressed concerns that players’ margins could contract in the upcoming years due to aggressive pricing by UltraTech.
Motilal Oswal revised its target valuation multiples for all C&W players, reducing the target price for Polycab to ₹6,950 from ₹8,380 with a buy rating, downgrading KEI Industries to neutral with a revised target price of ₹4,000 from ₹4,780, and maintaining a neutral stance on Havells with a target price of ₹1,650, down from ₹1,740.
On the other hand, analysts at JM Financial maintained a buy rating on UltraTech with a target price of ₹13,000, noting that the company’s return ratios are expected to improve structurally over the next 3-4 years due to rising asset turnover, low cost of expansions, and increasing profitability.
The stocks of Polycab, KEI Industries, and RR Kabel plummeted by 19 per cent, while shares of Havells and Finolex Cables fell by 6 per cent.
At midday, Polycab was trading at ₹4,867.25 on the NSE, down by 15.58 per cent. KEI Industries crashed 19.11 per cent to ₹3,071.95, RR Kabel slumped 13.07 per cent to ₹965.35, Havells declined 5.69 per cent to ₹1,459.90, and Finolex Cables plunged 6.03 per cent to ₹841.70.
UltraTech shares also declined by 5.66 per cent to ₹10,344.10, hitting an intraday low of ₹10,264.40.
The article was originally published on February 27, 2025.
