The brokerage sees a strong Compounded Annual Growth Rate (CAGR) in Polycab’s sales and net profit at 22% and 28% respectively over financial year 2025-2027 and sees no impact during this period due to UltraTech’s foray.
Polycab’s sales and PAT CAGR will be driven by the cables and wires business, new orders and improvement in its FMEG business, Jefferies wrote in its note.Jefferies cited present market conditions and rising competition beyond 2027 as the rationale behind its price target cut.
The price target cuts have come despite UltraTech asserting that it has no plans to foray into any other business and that this was a strategic diversification from the company.UBS has cut its price target on KEI Industries to ₹5,000 from ₹5,700 earlier, while Polycab’s target has also been cut to ₹7,700 from ₹9,000 earlier, which was among the highest target on the street for Polycab.
The brokerage believes that pricing aggression from UltraTech appears unlikely as it is targeting industry profitability in the segment and RoCE of 25%.
UltraTech also mentioned that the focus will be on utilisation without flooding the industry with supply.
Out of the 31 analysts that have coverage on Polycab, 25 have a “buy” rating on the stock, two of them say “hold”, while four have a “sell” rating on the stock. Out of the 18 analysts who have coverage on KEI Industries, 14 have a “buy” rating on the stock, while four of them have a “hold” rating.
Polycab and KEI Industries saw a bounce on Friday after a sharp sell-off on Thursday but could not sustain at the higher levels.
Polycab shares ended Friday’s trading session with gains of 0.8%, while those of KEI Industries ended 3.5% higher at ₹3,105.
