Polycab, KEI Industries, RR Kabel, Havells: Ambit initiates on wires stocks; details here

Ambit Capital has expressed positive views on the Indian wires and cables sector, highlighting key players inclduing Polycab India, KEI Industries, RR Kabel and Havells India. Ambit has given a ‘buy’ rating on these stocks, in the same pecking order, citing their strong market position and focus on exports as primary growth drivers. The targeted revenue compound annual growth rate (CAGR) of over 12% is seen as achievable given current market dynamics.

Indian wire and cable companies have thrived over the past five years due to consistent market share gains, improved return on equity (RoE), and de-leveraging. Ambit notes that the growth outlook remains robust, supported by increased capital expenditure in power transmission and distribution, as well as the renewable energy sector. These factors are expected to bolster the financial performance of leading firms such as KEI and Polycab, which rank among the top 30 globally in their field.

Ambit’s analysis points to aggressive capacity expansion plans, with an estimated Rs132 billion in capital expenditure projected for the fiscal years 2026 to 2028. This expansion is primarily aimed at meeting the rising demand driven by renewable energy investments and the need for enhanced infrastructure. While the entry of new players like UTCEM and Adani has raised concerns about potential market oversupply, Ambit remains confident that established firms will sustain their growth trajectory.

The focus on export markets is seen as a key strategy for these companies, with rising scale and competitiveness on the global stage. The ability to tap into international markets is expected to contribute significantly to revenue growth. Ambit also highlights that the market has already absorbed a nearly 21% correction in industry multiples, suggesting room for future appreciation if current expectations hold. Ambit has target prices of Rs 7,000 on Polycab, Rs 3,883 on KEI Industries, Rs 1,803 on RR Kabel and Rs 1,755 on Havells India.

Ambit prefers companies focused on cables rather than wires due to lower competition and higher-margin export opportunities. This preference is reflected in their recommendation hierarchy, with Polycab being favoured over KEI, followed by RR Kabel and Havells. The potential for high-margin exports positions cable-heavy companies advantageously compared to their wire-centric peers.

Despite challenges such as fluctuating commodity prices and potential slowing in real estate demand, Ambit’s forecast remains optimistic. The Indian wires and cables industry is poised for accelerated volume growth, supported by renewable energy demands, increased transmission spending, and emerging applications like data centres and electric vehicles. This presents a promising outlook for investors in this sector.