Polycab, KEI and peer stocks may see near-term de-rating on UltraTech's aggression, Nuvama warns

Brokerage firm Nuvama has warned that UltraTech Cement's aggression after its foray in the wires and cables space could lead to a near-term de-rating for the sector.

In its note on Friday, September 4, Nuvama said that UltraTech's moves could hurt the cables and wires segment in the near-term. It added that an impact between 150 to 250 basis points could not be ruled out, compared to an earlier expectation of 100 to 150 basis points.

However, it still continues to prefer Polycab and KEI Industries within the wires and cables space.

UltraTech's New Foray

UltraTech officially announced its foray into the wires and cables segment on Thursday, with the launch of the "Ultravolt" brand, three months ahead of the scheduled timeline of a December 2026 launch.

This also marks the group's fourth foray into a new business in the last three years.

The new cables and wires business aims to build a scaled national brand and become one of the top two players within five years. Ultravolt will be the second largest player in the wires segment by capacity.

The company has invested around ₹1,800 crore in capex for the same, but analysts anticipate that this figure could jump to ₹10,000 crore to ₹12,000 crore going forward.

UltraTech plans to reach more than one lakh retailers and has an ambitious rollout over 500 districts and 6,000 pin codes.

The launch of Ultravolt could likely be a challenge for the incumbents. Profitability of the sector could get challenged over the next few years, according to analysts who track the space.

Brokerage firm

Motilal Oswal believes that Ultratech could achieve 5% - 7% market share by the financial year 2031. It said it is not changing its earnings estimates for the stock and will wait for more clarity on the revenue, margin guidance for the cables and wires business.

Meanwhile, Jefferies said that Ultratech's proven distribution strength and Hindalco's raw material ecosystem provide advantages and the cables and wires business could contribute 3% - 7% of Ultratech's revenue and EBITDA by financial year 2030.

Of the 42 analysts that have coverage on the Ultratech Cement stock, 38 have a "buy" rating and two each have "hold" and "sell" ratings.

Shares of Ultratech Cement ended the previous session 0.7% lower at ₹11,312 apiece. The stock has declined 6.1% in the past month and is down 4.9% this year, so far.

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