Jefferies cuts KEI Industries target 11% as UltraTech's cables entry threatens wire makers
12 Sept, 04:23 IST · Plays out over months · 1 source
Cement giant UltraTech is entering the wires business, so cable makers like KEI, Polycab and RR Kabel face a rich new rival — prices and profits in cables may shrink.
Key facts
What the reporting establishes, before any reading of it.
- Jefferies cuts KEI target price 11% on UltraTech entry risk
- UltraTech (cement, Aditya Birla) enters wires and cables with deep pockets
- KEI, Polycab, RR Kabel, Apar all face share and margin pressure
How the news spreads
Step by step — from the first companies it hits to whole sectors.
Who it hits first
- KEI reprices first (-11% target cut); Polycab, RR Kabel, Apar follow on sympathy
- Cable margins face 1-3 year pressure as UltraTech discounts to buy share
- UltraTech itself spends capex for years before cables pay back
Who may gain
- Copper and polymer suppliers on extra cable capacity
- Consumers and builders on cheaper wires
Along the supply chain
Downstream
Builders, DISCOMs and retail buyers get keener wire pricing and wider choice.
Upstream
Copper (Hindalco) and PVC/polymer suppliers gain a large new buyer.
Where demand moves
Business
UltraTech builds cable plants and dealer networks over 1-2 years; incumbents defend via brand, distribution depth and service while selectively matching prices.
Capital
Money exits pure cable plays into diversified capital-goods names; Birla-group holders cheer the growth vector.
How it spreads across sectors
Capital Goods
cables sub-segment negative on entrant; rest of capital goods unaffected
When it plays out
Immediate
Cable stocks dip 3-6% on target cuts and FII selling
Medium term
Share battle plays out over 2-3 years; demand growth decides if all can win
Short term
Q2 commentary on pricing and UltraTech's rollout pace sets the trading range