Polycab, KEI to Havells Under Pressures; UltraTech Forays into C&W Segment

Shares of various cable and wire makers tumbled on February 27 after UltraTech announced its foray into Cables and Wires (C&W). The move is part of its strategy to become a comprehensive ‘Building Solutions’ provider.

However, investor sentiments have dampened over Aditya Birla Group company’s entry in the Cables and Wires market, as the decision raises concerns over heightened competition, potential pricing pressure and shift in market dynamics.

Shares of Polycab India took a huge blow as it hit the 10% lower circuit in today’s trading session clocking ₹5,189 apiece, while Havells India went down by 9% to ₹1,140 per share. Meanwhile RR Kabel was down by 13% to hit an all-time-high of ₹965.60 apiece. UltraTech shares also came under intense pressure as it tumbled 5% to reach ₹10,415 apiece.

Can UltraTech’s foray cause disruption in the C&W segment?

While announcing its entry in the C & W segment, UltraTech Cement (UTCEM) has decided to put forth ₹18 billion as capex, which is expected to kick off by December 2026.

Nuvama Institutional Equities believes that the C & W industry is expected to report a balanced demand-supply scenario, in the span of 3-4 years. It’s also expected to post a CAGR of 13%.

The brokerage said, “Secondly, assuming 60–70% capacity utilization (CU) in year three (as it builds distribution for wires and secures approvals for various cable SKUs), it will account for less than 5% of the C&W market at that time, in our estimate. Hence, this entry is expected to have a modest impact on C&W industry volumes and margins in the medium term.”

Impact on C&W players’ earnings

Buoyed by government's special emphasis on infrastructure development, rising nuclear families, increased electrification in rural areas, the cables and wires industry has been reporting steady growth.

As per experts, the industry is also set to benefit from several government policies. The move could also shift dependence from unorganised players to organised players.

Nuvamma concludes by stating that UltraTech's foray will not have any impact on the earnings of C&W players from FY25-28. The brokerage retains a bullish stance on KEI Industries, Polycab, and Havells.