Polycab India shares witnessed a decline of 6% from the day’s high after multiple brokerages revised their target prices downward, following UltraTech Cement’s strategic entry into the cables and wires (C&W) segment. The stock traded at ₹4,649.70, down 1.35% or ₹63.70, as of March 3, 10:21 AM IST.
UltraTech Cement announced its plans to tap into the C&W market by leveraging synergies with its existing cement business rather than aiming for outright market disruption. According to UltraTech’s guidance, 60% of its revenues in the segment will come from housing wires, while the remaining will be generated from cables, including low-tension, flexible, and control cables. The company intends to limit its market reach to 60-65% of the total addressable market (TAM), avoiding aggressive expansion strategies. UltraTech has also capped its capital expenditure (Capex) at ₹18 billion up to FY31, emphasizing utilization optimization rather than oversupply. Moreover, the company has set an industry-level profitability target with a return on capital employed (RoCE) of 25%, suggesting that pricing strategies will remain stable rather than aggressive.
In response, UBS revised its target for Polycab India, cutting it from ₹9,000 to ₹7,700, while maintaining a ‘Buy’ rating. KEI Industries also saw a downward revision, with UBS reducing its target price from ₹5,700 to ₹5,000, though it retained a positive outlook on the stock.
Similarly, Jefferies maintained a ‘Buy’ rating on Polycab but lowered its target price from ₹7,700 to ₹6,485, citing the competitive pressures introduced by UltraTech’s entry into the sector. Polycab shares had already experienced a 20% decline over the last two days as investors reacted to the increasing competition in the C&W industry.
Despite the concerns, Jefferies remains optimistic about Polycab’s long-term growth, projecting a robust sales compound annual growth rate (CAGR) of +22% and a profit after tax (PAT) CAGR of +28% over FY25-27E. The brokerage firm attributes this growth to Polycab’s expansion in the C&W segment, new order inflows, and improvements in the fast-moving electrical goods (FMEG) business. Additionally, exports remain a key long-term growth driver for the company, particularly under the China+1 strategy.
However, factoring in recent market corrections and growing competition beyond 2027, Jefferies has lowered its target price-to-earnings (P/E) multiple by 15% to 32x, reflecting a more cautious outlook for Polycab’s valuation.
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