Cables and wires stocks Polycab India, KEI Industries, and RR Kabel were trading with losses between 1% to nearly 8% on Wednesday, September 2, following brokerage firm JM Financial's downgrades. According to reports from CNBC TV18, JM Financial has downgraded Polycab and KEI Industries to 'add' from their previous 'buy' recommendations each, while maintaining a 'reduce' rating on RR Kabel from its previous 'add' recommendation. At 2:08 pm, Polycab was trading 0.8% lower at ₹8,825 apiece, KEI Industries was down 3.2% at ₹5,177.5, and RR Kabel was down 7.5% at ₹2,654 apiece.
As reported by CNBC TV18, JM Financial has set a target price of ₹9,550 on Polycab, indicating an upside of 7.4%; a target of ₹5,750 on KEI Industries, indicating an upside of 7.5%; and a ₹2,750 price target on RR Kabel, indicating a downside of 4.2% from its previous close. The brokerage noted that at present, the cables and wire stocks are trading at a 4-5% premium from their five-year and a 25% premium to their long-term average price-to-earnings multiple.
According to JM Financial's analysis reported by CNBC TV18, after a strong growth rally, it is time to question the absence of volume growth, with revenue growth potentially looking weaker over the next 12 months. The key question remains whether the street is underestimating new competition. JM Financial estimates that Ultratech and Diamond Power will cumulatively command ₹17,000 crore revenue by financial year 2029, having 11%-12% of the total market share in this space. The brokerage also noted that adjusting for new competition, the industry size could be ₹1.35 lakh crore, squeezing the domestic opportunity to an estimated CAGR of 10.5% between FY26-29.
As reported by CNBC TV18, JM Financial stated that the Indian cables and wires industry could be worth ₹1.52 lakh crore by FY29 with growing at a Compounded Annual Growth Rate (CAGR) of 15% during this period. The brokerage also identified risk susceptibility, noting that Polycab is most susceptible to risks of tapering growth and peaking margins, followed by RR Kabel and KEI Industries. According to CNBC TV18, JM Financial has downgraded Polycab and KEI Industries to 'add' from their previous 'buy' recommendations each and now has a 'reduce' rating on RR Kabel from its previous 'add' recommendation.
