Cables & Wire Stocks Slide for Second Day as Aditya Birla Group Enters Industry

The cables and wire (C&W) sector continued to face selling pressure for the second consecutive session after the Aditya Birla Group announced its entry into the industry. Stocks of key players such as Polycab India, KEI Industries, and Havells India witnessed a further decline on February 28, 2025, amid growing concerns over intensifying competition in the segment.

Stock Market Reaction

Following the announcement, the C&W segment experienced a sharp sell-off, with major stocks dropping significantly:

• Polycab India fell 1.7%
• KEI Industries declined 3.2%
• Havells India dropped 2.82%
• RR Kabel also faced losses
• Ultratech Cement saw an intraday drop of over 2%

On February 27, the sell-off was even more severe, with Polycab, KEI, Havells, and RR Kabel losing over 17% in a single session. Even Ultratech Cement shares took a hit, closing over 6% lower.

Ultratech Cement’s Rs 1,800 Crore Investment

The Aditya Birla Group’s flagship company, Ultratech Cement, announced on February 27 that it plans to invest Rs 1,800 crore over the next two years to set up a cables and wires facility in Bharuch, Gujarat. The plant is expected to be commissioned by December 2026.

While the financials of existing C&W players may not be impacted immediately, analysts suggest that the entry of a major conglomerate like Aditya Birla Group could lead to:

• Increased competitive pressure
• Erosion of valuation multiples
• Long-term market share realignment

Analysts’ Take on the Impact

Motilal Oswal Financial Services stated that Ultratech’s foray into the cables and wires business could pressure valuation multiples of existing companies in the segment. However, the brokerage noted that earnings of current C&W firms will not see an immediate hit until the plant becomes operational.

Meanwhile, JM Financial pointed out that the industry consists of nearly 400 players, including small and medium enterprises (SMEs) and large firms, with revenues ranging from Rs 50 crore to Rs 400 crore. Given this fragmented structure, the sector is well-suited for a strong new entrant with deep financial backing, such as Aditya Birla Group.

Market Sentiment & Investor Concerns

Despite reassurances from analysts about no immediate impact on earnings, investor sentiment remains weak. The market is concerned that Ultratech Cement’s scale, brand reputation, and financial strength could disrupt the existing market once the new plant becomes operational.

Conclusion

The cables and wires sector has entered a period of uncertainty, with stock prices declining despite no fundamental changes in current earnings. The market’s response suggests apprehension about increased competition in the future, with valuation concerns playing a key role in the sell-off.

While existing players like Polycab, KEI, and Havells remain industry leaders, they may need to adapt to the evolving competitive landscape once Ultratech Cement's project becomes operational in 2026. Investors will be closely watching how the C&W sector navigates this new challenge in the coming months.

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