Polycab India, KEI Industries, Havells India, and R R Kabel’s shares fell up to 15% on the BSE in Monday’s intra-day trade amid significant volumes after UltraTech Cement announced a Rs 1,800 crore investment in the wires and cables (W&C) segment over the next two years.
Polycab India, KEI, Havells, RR Kabel, UltraTech Stocks Drop Up to 15% – Here’s What’s Driving the Decline
UltraTech Cement shares fell 5% to Rs 10,411.90 in intraday trading. Polycab India (down 15% at Rs 4,894.80), KEI Industries (down 15% at Rs 3,226.65), and R R Kabel (down 13% at Rs 962.20) all lost more than 10% of their value. Havells India (down 9% at Rs 1,402.50) and Finolex Cables (down 5% at Rs 850) fell up to 9%. Havells India and R R Kabel were trading around their 52-week lows. In comparison, the BSE Sensex was up 0.01 percent at 74,612.66 at 09:33 a.m.
UltraTech stated in an exchange filing on Tuesday, February 25, 2025, after market hours, that its proposed entry into this segment of the construction value chain, through its Building Products Division, is consistent with the company’s strategy of strengthening its position as a comprehensive Building Solutions provider.
The business will establish its first plant in Bharuch (Gujarat), which is projected to be operational by December 2026. The firm intends to address the expanding need for wires and cables in a variety of industries, including residential, commercial, infrastructural, and industrial applications. From FY19 to FY24, the wires and cables industry saw a CAGR of around 13%.
The business thinks that the anticipated foray into the industry will provide value to its stockholders.
CLSA analysts anticipate that UltraTech will prioritize wires over cables due to its greater reliance on retail (housing) and shorter time to market. The cables and wires market will need to develop at a CAGR of 11-13% over the next 4-5 years to absorb the announced expansion by incumbents and new competitors. Weaker growth might reduce the sector’s profitability in the medium term, according to the brokerage business.
Analysts say UltraTech has a better chance of winning in wires than cables due to its retail concentration and strong brand recognition. In addition, cables require many clearances and tender wins, whereas wires are likely to have a shorter time to market.
India’s wires and cables market is worth Rs 80,000 crore ($9 billion), with cables accounting for two-thirds of the total. The market is relatively structured, with branded companies accounting for 70% of capacity. Housing accounts for 80 percent of the wires segment’s revenue, with a greater reliance on new construction.
Incumbents in the wires and cables business are already spending Rs 10,000 crore on capacity development over the next 2-4 years. Adding UltraTech’s outlay of Rs 1,800 crore (and assuming no additional growth by any other companies), at 4x-5x asset turn, the sector would require an 11 percent -13 percent CAGR over the next five years to absorb this capacity. If demand does not increase as expected, the industry’s profitability may suffer, according to CLSA.
