KEI Industries, Polycab, Havells Stocks Plunge as UltraTech Cement Enters Wires & Cables Segment

KEI Industries, Polycab, Havells Stocks Plunge as UltraTech Cement Enters Wires & Cables Segment

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.

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Source: Moneycontrol.

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