Jefferies has maintained a Buy rating on UltraTech Cement with a target price of ₹13,265, following the company’s unexpected entry into the Cables and Wires (C&W) segment. UltraTech plans to invest ₹18 billion over the next two years, leveraging its manufacturing expertise and strong customer relationships. Jefferies views this move as a strategic use of UltraTech’s surplus cash flow, given its strong EBITDA and cash flow growth profile.
The brokerage sees the relatively small capex as having minimal impact on UltraTech’s financials and suggests any knee-jerk negative market reaction should be considered a buying opportunity. Jefferies expects UltraTech’s foray into C&W to generate revenue equal to 5-7% of the industry’s total by FY29, assuming 4-5x asset turnover.
However, Jefferies anticipates limited competitive impact on existing market leaders, particularly Polycab, due to the high entry barriers in power transmission and industrial cables, which typically require 2-4 years for prequalification. Jefferies believes Polycab’s premium market positioning will remain intact, shielding it from any significant competition. The brokerage also expects a lower impact on housing and B2C players like Finolex Cables (FNXC) and Havells (HAVL).
Polycab remains Jefferies’ top pick in the C&W industry, with the brokerage emphasizing UltraTech’s strategic entry as a long-term growth driver rather than an immediate competitive threat to established players.
