Crash of Wires and Cables stock due to announcement of UltraTech entry

On 27th February, 2025, major cables and wires companies’ stocks recorded a crash close to 21 percent. The reason for this is the announcement of the entry of Ultratech in the cable and wire segment. It led to a massive sell-off in the cable and wire’s stock. 

The five major stocks facing loss from this huge sell-off were Havells India, Polycab India Ltd., RR Kabel Ltd., Finolex Cables Ltd., and KEI Industries Ltd. The stocks lost more than Rs. 33,000 crore of their market capitalisation. 

Entry of Ultratech in Cables and Wires (C&W) segment

UltraTech, a biggest cement manufacturer in India plans to inject around 200 million dollars to establish cables and wires manufacturing facility in the state of Gujarat. The company intends to expand its area of operations in the wires and cables segment in the upcoming two years. The manufacturing facility will start working by late 2026.

The announcement of the company adversely affected the stocks of wires and cables companies and shares of UltraTech as well.

Impact on shares of wires and cables companies

Shares of KEI industries recorded a contraction of 21 percent. While Finolex Cables face a decline of 6 percent. Both RR Kabel and Polycab recorded a decline of 19 percent each.

Polycab and KEI Industries recorded loss of market capitalisation of around Rs. 16,000 crore and Rs. 7,632 crore, respectively.

Apart from the wires and cables’ stocks, UltraTech shares also felt the contraction in the market. The company’s share fell by about 5 percent and recorded a market capitalisation loss of 2 billion dollars. 

Overall, the shares of wires and cables companies recorded a fall in the range of 30 percent to 50 percent from their respective high points. Despite this, several stocks in this segment are trading well higher than their five-year average price-to-earnings multiple. 

Impact on wires and cables companies

The wires and cables industry in India has multiple players with no players having more than 20 percent of share in wires or cables segments. There are close to 400 companies which are small to big firms involved in this segment. The revenue generation of these companies is around Rs. 50 crore and Rs. 400 crore. It is a great opportunity for a firm to enter in the market with significant financial resources. 

UltraTech has some competitive advantages in terms of procurement of raw materials and networks in the real estate sector. UltraTech can directly source its supply of raw materials like aluminium and copper from Birla Copper and Hindalco, which are also part of the Aditya Birla Group.

However, the impact of the business operations of UltraTech will not affect earnings of its competitors until the start of operation of the manufacturing facility.

The chairman and managing director of KEI Industries, Anil Gupta also stated that the cables and wires industry is quite big and will be able to take new players without affecting the margins or business operations of existing players. One of the reasons for this is there is still time for Ultratech to start its operations in the C&W segment and to create its market presence. 

The image added is for representation purposes only