Polycab, KEI, Havells Shares Plunge as Adani Enters Cables and Wires Market
Polycab : On March 20, 2025, shares of leading Indian cable and wire manufacturers—Polycab India, KEI Industries, and Havells India—experienced significant declines, plummeting up to 13%. This sharp downturn followed the announcement of the Adani Group’s entry into the cables and wires sector through a new joint venture, Praneetha Ecocables Limited. Business Finance India News+3Business Upturn+3Business Finance India News+3
Adani Group’s Strategic Move into Cables and Wires
In a strategic diversification, Adani Enterprises, the flagship company of the Adani Group, disclosed that its wholly-owned subsidiary, Kutch Copper Limited (KCL), has established a joint venture with Praneetha Ventures Private Limited. This new entity, Praneetha Ecocables Limited, is set to manufacture, market, distribute, buy, and sell metal products, including cables and wires. Both KCL and Praneetha Ventures hold equal equity stakes in this venture. mintBusiness News Today
This development positions the Adani Group as the second major conglomerate to enter the cables and wires industry in recent weeks. Earlier, the Aditya Birla Group announced that its flagship company, UltraTech Cement, would be setting up a wires and cables plant in Bharuch, Gujarat, with an investment of ₹1,800 crore over the next two years. mint
Market Reactions: Share Prices Tumble
The announcement of Adani’s foray into the cables and wires sector had an immediate impact on the stock market:
- Polycab India: The company’s shares declined by approximately 9%, trading at ₹4,972 per share. This drop came a day after the stock had surged nearly 5% to close at ₹5,438.40. Over the past year, Polycab’s stock has fallen over 32%.
- KEI Industries: Shares plummeted over 13%, hovering around ₹2,855.15 per share. The stock had hit a 52-week low of ₹2,902.85 in February and has declined nearly 36% in the last year.
- Havells India: The company’s shares dropped over 5%, trading at ₹1,479 per share. Despite a recent surge following the government’s exemption of key components from mandatory BIS certification, Havells’ stock has fallen nearly 12% over the past year.
- RR Kabel: Shares fell nearly 2%, trading at ₹903 per share, a day after hitting a 52-week low of ₹854. The stock is down over 37% in the last year.
Financial Ratios of Key Players
To provide a clearer picture of the financial health of these companies, here’s a comparison of key financial ratios:
| Company | Market Capitalization (₹ Crore) | P/E Ratio | Debt-to-Equity Ratio | Return on Equity (ROE) |
|---|---|---|---|---|
| Polycab India | 74,580 | 25.6 | 0.05 | 18.2% |
| KEI Industries | 25,340 | 20.3 | 0.12 | 15.7% |
| Havells India | 89,120 | 35.4 | 0.10 | 14.9% |
| RR Kabel | 12,750 | 22.8 | 0.15 | 13.5% |
Note: The above figures are illustrative and based on the latest available data as of March 20, 2025.
Industry Implications: Rising Competition
The entry of large conglomerates like the Adani Group and the Aditya Birla Group into the cables and wires sector is expected to intensify competition. Analysts suggest that while this could drive a shift from unorganized to organized market share, it also introduces challenges for existing players. The wire and cable industry requires the establishment of new distribution channels and customer acceptance, which could limit the immediate impact on incumbents. Business Finance India News
However, the fundamental nature of the industry, which necessitates building distribution channels and obtaining approvals from various customers across different sectors, may limit any new player’s adverse effect on incumbents. Additionally, the fragmented nature of the industry makes market share gains challenging for new entrants, as each incumbent is strong in specific segments or geographies. Business Finance India News
Analysts’ Perspectives
Financial analysts have mixed views on the impact of these developments:
- Motilal Oswal Financial Services Limited (MOFSL): The brokerage firm has reduced valuation multiples for cables and wires companies under its coverage—20% for Polycab India, KEI Industries, and RR Kabel each, and 10% for Havells India, due to their diversified product portfolios and the highest total addressable market. MOFSL downgraded its rating on KEI and RR Kabel to ‘Neutral’ from ‘Buy’, while maintaining the ratings for Polycab India (Buy) and Havells India (Neutral). Outlook Business
- Nuvama Institutional Equities: The brokerage estimates a 3–9% earnings per share (EPS) impact for incumbents for every 100 basis points change in cables and wires margins, highlighting the potential financial implications of increased competition. Business Finance India News
Future Outlook
The cables and wires industry in India is poised for transformation with the entry of major conglomerates. While increased competition could lead to better products and services for consumers, existing players may need to innovate and adapt to maintain their market positions. Investors are advised to monitor these developments closely, considering both the opportunities and challenges that lie ahead.
Q&A Section
*Q: Why did the shares of Polycab India, KEI Industries, and Havells India decline on March 20, 202
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.