With buy ratings, UBS Securities began covering the cable and wire businesses Polycab India and KEI Industries. In the upcoming year, the brokerage expects these stocks to rise by 26-31%. In FY24–FY30, the cable and wire segment is expected to increase at a rate twice as fast as the GDP due to factors such capacity expansion, robust domestic demand bolstered by transmission and distribution capital expenditures, and the real estate cycle.
UBS Report
On Tuesday, Polycab gained 2.2% and KEI shares increased by 7.6%. The brokerage claimed that the cable and wires (C&W) segment has been rerated as a result of increases in sales and profit margins. It stated that there are minimal short-term de-rating risks and that valuations are consistent with the overall market. There is unlikely to be a short-term glut in the cable industry given the tremendous potential in unexplored international markets. Power cables, driven by transmission capex, are expected to surpass other C&W segments in size.
Prediction For Cables And Wire Industry
Between FY24 and FY30, the cables and wires industry is predicted to increase at a rate twice as fast as India’s GDP, with a projected market size of $20 billion by FY30, up from its present $8 billion. Additionally, UBS expects the top five companies in this area to have a significant growth in market share throughout this time frame. With strong demand, operating leverage, growing market share, and export penetration, UBS’s Cable & Wire coverage is expected to increase at a Compound Annual Growth Rate (CAGR) of 20% and 25%, respectively, between FY24 and FY28.
Surge In Stock Price Of KEI Industries And Polycab
Following the UBS report, KEI Industries’ stock rose 9.3 percent to a day high of ₹4776.85. The current price is little over 5% lower than its top of ₹5,040.40 on June 14, 2024. In the meantime, shares of Polycab India surged up to 3.6 percent, reaching a high of ₹6881.40 within the day. The stock is currently only 6% away from its June 25, 2024, peak of ₹7,330. In the meantime, it has recovered 80.5 percent from January 11, 2024, when it hit its 52-week low of ₹3,812.35. KEI Industries has increased by 78 percent year over year, while Polycab India has increased by more than 38 percent year over year, demonstrating their strong growth paths.
