Polycab India shares dropped 10% after UltraTech Cement Limited, a flagship company of the Aditya Birla Group, announced its entry into the wires and cables segment. This strategic move intensifies competition in a sector dominated by established players such as Polycab India, Havells India, and KEI Industries.
UltraTech Cement has allocated ₹1,800 crore for this venture, aiming to leverage its strong financial backing and extensive market reach. The company plans to execute this expansion through its Building Products Division, with a state-of-the-art manufacturing plant in Bharuch, Gujarat. The facility is expected to be operational by December 2026.
The wires and cables industry in India has seen impressive growth, with a revenue CAGR of approximately 13% between FY19 and FY24. This surge is fueled by increased electrification, urbanization, and the transition from unorganized to organized players. UltraTech Cement’s entry could disrupt the market dynamics, given its brand equity and distribution network.
Jefferies’ Outlook on UltraTech Cement’s Expansion
UltraTech Cement is making a strategic move into the cables and wires segment, leveraging its strong financial position for expansion. Global brokerage firm Jefferies has maintained a “Buy” rating on UltraTech Cement, setting a target price of ₹13,265, highlighting the company’s calculated approach to diversifying its business.
Jefferies believes this investment will contribute around 5-7% of the industry’s total revenue by FY29. However, the investment remains relatively small in comparison to UltraTech’s overall financials, ensuring minimal disruption to cash flow. The power transmission and industrial cables market presents high entry barriers, requiring prequalification periods of 2-4 years. This could limit direct competition with industry leaders like Polycab and KEI, allowing UltraTech to establish itself steadily in this space.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions.
