Citing takeaways from the Polycab management’s roadshow, Morgan Stanley said there is a strong demand uptick in the cables and wires space in the fourth quarter so far, and the company’s exports are shaping up well.
The Indian cables and wires space will have an upside in cost competitiveness from import tariff imposition by the US on peer countries such as China and Mexico. Polycab is expecting exports to form more than 10% of its top line over the next five years.
Morgan Stanley said it sees a limited industry impact for the next four to five years due to the following reasons:
- UltraTech Cement’s cables and wires plant is expected to ramp up by financial year 2031.
- Scaling the cable business has long gestations with stringent product approvals at the SKU level, distribution network. However, the wires business has a lower approval process but requires relationships with electricians, giving the safety aspect.
- Investment of ₹1,800 crore forms 10% of the current cables and wires industry and 3% – 4% of the industry in financial year 2031 as per estimates.
The brokerage said the EBIT margin of the cables and wires space is expected in to be in the 12% – 14% range in the near term and 11% – 13% in the long run.Polycab shares had sold off sharply last week along with its other wires and cables peers, including KEI Industries, Havells, and others, after India’s largest Cement company UltraTech Cement Ltd. announced a foray into the cables and wires segment.
Of the 31 analysts that have coverage on Polycab, 25 have a “buy” rating, two have a “hold” rating and four have a “sell” rating.
Polycab shares have opened higher for the fourth day running, currently trading 0.3% higher at ₹4,921. The stock is down 33% so far this year.
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First Published: Mar 5, 2025 9:22 am IS
