Shares of Polycab India and KEI Industries saw a rise on March 3. However, market sentiment remained weak. Major indices witnessed volatility due to selling pressure. The major reason for the rise in both stocks is the view of brokerage firms. The impact of UltraTech's announcement of entering the cables and wires (C&W) business was seen on the stocks of Polycab India and KEI Industries. But, after the report of brokerage firms, the direction of both the stocks changed.
Brokerage firms reduced target prices
Polycab India stock was trading 3.21 per cent higher at Rs 4,861.30 on NSE at 12:53 pm. KEI Industries stock was up 1.56 per cent at Rs 3,118. Investment bank UBS has changed its outlook on major Cables and Wires manufacturing companies. It has given a buy recommendation on KEI Industries shares. However, it has lowered the target price of the stock to Rs 5,000 from Rs 5,700. It has also maintained a buy recommendation on Polycb India shares. But, it has lowered the target price of the stock to Rs 7,700 from Rs 9,000.
Shares fall due to UltraTech's announcement
Brokerage firm Jefferies has also recommended buying Polycab India shares. However, it has reduced the target price of the stock from Rs 7,700 to Rs 6,485. This reduction in target price has been done after a sharp decline of 20 percent in the last two sessions. The reason for this decline was UltraTech's announcement to enter the cables and wires business. Polycab India is trading at 27 times its FY26 estimated earnings. This is lower than the historical average PE of this stock.
Polycab India's good growth will continue
Jefferies has said that there is no expectation of any impact on the growth of Polycab India during FY25-27. The company's sales CAGR can be 22 percent and profit CAGR can be 28 percent. This is due to the company's better performance in new orders and fast moving electrical goods (FEMG) segment. Jefferies believes that there is good potential for the company in exports.
UltraTech Cements plan
Last week, UltraTech Cement announced its entry into the cables and wires business. It said that it would invest Rs 1,800 crore in two years to set up a cables and wires plant in Bhaduch, Gujarat. After this announcement, UltraTech's stock fell 5 percent. However, on March 3, UltraTech Cement's stock was trading at Rs 10,403, up 2.71 percent.
