Shares of UltraTech Cement fell nearly 4% on February 27 after the company announced its entry into the wires and cables (C&W) segment with an investment of ₹1,800 crore. The move triggered a sharp sell-off in existing players, with KEI Industries and Polycab India plunging 17% and 14%, respectively. Havells India dropped 5.1%, while RR Kabel sank 12%.
UltraTech Cement’s Plan for the C&W Market
UltraTech Cement is also opening a wires and cables manufacturing plant in Bharuch in Gujarat with a target date of December 2026. The project is in tandem with plans by the firm to expand its activities from cement into a complete range of building solutions.
Despite competitive concerns, broker Nuvama Institutional Equities held that UltraTech expansion might have a modest impact on the sector by FY28 in light of the highly fractured market. The sector leader does not have a market share that is more than 18%, with distribution challenges likely to hinder sector growth in case of UltraTech.
Analysts Weigh In
- Jefferies believes any sharp decline in UltraTech Cement’s stock presents a buying opportunity, as C&W sales channels differ from cement.
- Citi noted that while the move is relatively small in scale, it might dilute UltraTech’s image as a cement pure-play.
- The ₹1,800 crore investment represents 13% of UltraTech’s free cash flow over the next two years, with the new business expected to generate ₹1,200 crore in revenue by FY27.
The development has shaken investor sentiment in the wires and cables sector, leading to significant losses in key stocks. However, analysts believe the long-term impact remains uncertain and will depend on UltraTech’s execution and further investment plans.
Do you have a news tip for Lakshmishree reporters? Please email us at media@lakshmishree.com.
Source: Moneycontrol.
News Desk
