J.P. Morgan has initiated coverage on India’s cables and wires (C&W) sector, highlighting KEI Industries and Polycab India as its preferred picks amid a structural electrification and energy transition cycle.
In its initiation note, the global brokerage described cables and wires companies as “picks and shovels” beneficiaries of India’s electrification push, citing rising power demand, grid expansion, renewable energy integration, and energy transition-led capex as key structural drivers.
KEI Industries: Preferred pick with 21% upside
KEI Industries has been assigned an Overweight rating, with JPMorgan projecting a 21% upside from current levels. The brokerage believes KEI is better positioned than peers due to its higher exposure to cables, which account for around 65–70% of its revenue mix.
JPMorgan highlighted KEI’s cleaner play on the cables and wires segment, stronger export presence, and higher Extra High Voltage (EHV) exposure. It also expects margin improvement as recently commissioned capacities ramp up over the next few quarters. The brokerage estimates earnings growth of around 20–25% over the next three years, supported by volume growth and operating leverage.
Polycab India: Strong near-term growth, competition risks ahead
Polycab India has also been initiated with an Overweight rating, with JPMorgan seeing a 16% upside potential. The brokerage expects Polycab to deliver stronger near-term growth compared to peers but flagged risks to its margin superiority as competition intensifies.
According to the report, Polycab’s EBIT margins, which are around 450 basis points higher than the top five peers, could normalize over time as new entrants target the organized wires segment and as Polycab enters a fresh capex cycle to defend market share in cables.
Copper prices and capacity expansion key drivers
JPMorgan noted that rising copper prices could lead to near-term earnings upgrades across the sector, estimating FY27 earnings to be 8–12% above consensus. However, it cautioned that the entry of large conglomerates into the wires segment could create a capacity shock, putting pressure on industry margins and returns over the medium term.
Despite these risks, the brokerage sees KEI and Polycab as relatively better placed due to their scale, product mix, and earnings visibility. While Polycab is expected to grow faster in the near term, JPMorgan said it slightly prefers KEI on a structural basis, though valuations make the risk-reward profile similar for both stocks.