UltraTech Cement’s Entry Sends Cable Stocks Tumbling

Shares of leading wire and cable companies, including Polycab, Havells, KEI Industries, and RR Kabel, plummeted up to 14% on Thursday. The sharp decline came after UltraTech Cement, an Aditya Birla Group company, announced its entry into the wires and cables (W&C) segment with a ₹1,800 crore investment.

Interestingly, UltraTech Cement itself saw a 5% decline in its stock price, indicating concerns about its expansion strategy beyond cement.

UltraTech Cement’s Big Announcement

UltraTech Cement revealed plans to:

• Set up a wires and cables plant in Bharuch, Gujarat with an investment of ₹1,800 crore.
• Commission the plant by December 2026.
• Expand its portfolio beyond cement to become a full-fledged building solutions provider.

This move has sparked concerns about increased competition in the cable sector, leading to sharp stock price corrections.

How Cable Stocks Reacted

Among these, Polycab suffered the biggest blow, losing over ₹75,000 crore in market capitalization in just one session.

Why Are Investors Worried?

1. Increased Competition: UltraTech’s entry raises concerns over price wars in the sector.
2. Capex Pressure: The industry is already undergoing ₹10,000 crore capex over the next 2-4 years.
3. Profitability Risks: The fragmented nature of the W&C industry means existing players might see lower profit margins.

UltraTech Cement Shares Also Declined

• UltraTech Cement stock fell over 5% to ₹10,411.90, wiping out ₹3.02 lakh crore in market cap.
• Investors are concerned that the company's ₹1,800 crore investment may dilute focus from its core cement business.

Brokerage Views: Mixed Opinions on the Move

Cautious Stance

• Citi: Believes UltraTech's W&C foray is small but could hurt its cement pure-play positioning.
• CLSA: Thinks UltraTech will focus more on wires than cables, but its entry will increase competition and pressure margins.

Supportive Stance

• Jefferies: Suggests the stock correction is a buying opportunity, estimating the new segment could contribute 10-12% revenue by FY25.
• Nuvama Institutional Equities: Believes export opportunities and industry growth will absorb UltraTech’s impact.

Stock Ratings and Target Price Revisions

Motilal Oswal has downgraded KEI Industries and RR Kabel, citing increased competition and valuation concerns.

What’s Next for the Sector?

🔹 Investors should brace for short-term volatility in wire & cable stocks.
🔹 UltraTech’s long-term impact on the industry will depend on execution and market acceptance.
🔹 Analysts remain cautious, with some suggesting buying on dips while others warn of profit pressures.

UltraTech Cement’s ₹1,800 crore foray into the W&C sector triggered a major sell-off in leading cable stocks, with Polycab, RR Kabel, KEI Industries, and Havells taking a hit. While brokerages have mixed opinions, the sector faces increased competition and margin pressures in the near term.

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