Polycab, KEI, Havells, RR Kabel, UltraTech Drop Up to 15% – Here's Why

In Monday’s intra-day trading on the BSE, Polycab India, KEI Industries, Havells India, and R R Kabel experienced a 15% decline in share prices that can be attributed to strong turnover after UltraTech Cement announced that it will be venturing into wires & cables (W&C) at an investment of INR 1,800 crores over the next two years. 

Shares of UltraTech Cement dipped 5 percent to Rs 10,411.90 during intra-day trades. Among the W&C stocks, Polycab India (15 percent lower at Rs 4,894.80), KEI Industries (15 percent down at Rs 3,226.65), and R R Kabel (13 percent lower at Rs 962.20) all fell over 10 percent. Havells India (9 percent lower at Rs 1,402.50) and Finolex Cables (5 percent lower at Rs 850) all experienced drops of 9 percent and 5 percent respectively. Notably, Havells India and R R Kabel had reached their 52-week lows. Meanwhile, the BSE Sensex was up 0.01 percent to 74612.66 as of 09:33 am.

More on Polycab India Ltd 

UltraTech announced on their X post on February 25, 2025 post-market hours that entry into this subsector of value chain construction work under their Building Products Division is aimed at supporting the company’s Building Solutions provider strategy which requires them to vertically integrate into building services. 

The company plans to build its first plant in Bharuch, Gujarat, which is expected to be operational by December 2026. The plant aims to satisfy the increased need for wires and cables in the residential, commercial, infrastructure, and industrial sectors. The company claims that the wires and cables business from FY19 to FY24 has substantially increased in revenues with an approximate compound annual growth rate (CAGR) of 13% during this period.

The company knows that this investment venture into new regions will greatly benefit their shareholders.

According to CLSA, UltraTech’s greater reliance on retail (housing) and shorter time to market suggests that the company will shift attention towards wires rather than cables. For the new entrants and incumbents to be able to absorb the announced expansion, the segment would need a 11 per cent -13 percent CAGR over the next 4-5 years in the cables and wires industry. Unfortunately from medium term, weaker growth could impact the profitability of the sector, the brokerage firm stated.

Based on brand recall and retail focus UltraTech is also expected to perform better in wires compared to cables. Additionally, for wires there is faster time to market whereas for cables there are several tenders and approvals that are required.

The total size of India wires and cables market is estimated Rs 800 billion ($9bn), out of which 2/3 are cables and the balance are wires. The market is fairly captured by a lot of older brands which leads to 70% of players in the market being of organized. For the wires segment, 80% of the demand comes from the housing sector which is highly reliant on new home developments.

Incumbents in the cables and wires industry are already making progress spending 10,000 crores on capacity expansion over the next 2-4 years. Adding UltraTech’s Rs 1,800 crore capex (and assuming no expansion from any other player), at 4x-5x asset turn, the industry would need to see an 11% -13% CAGR over the next five years to absorb this capacity. On the other hand, if the demand does not come through to the same extent, it would weigh on the profitability of the industry, CLSA mentioned.