The entry of Ultratech and its consequences
Ultratech, part of Aditya Birla Group, announces investment plan ₹USD 180 billion of the establishment of cable and wire manufacturing facilities in Bharuch, Gujarat is expected to be operational in December 2026. The move fits in with its broader strategy to become a comprehensive provider of “building solutions”, just like its recent venture into the paint industry. Indian wire and cable industry, value ₹Rs 84,500 crore in fiscal 24 have seen a significant expansion, with major players bearing substantial capital expenditures. However, Ultratech’s entries introduce new competitive pressures that could reshape the industry’s landscape over the next decade.
Rapid market reaction
The direct impact of Ultratech’s announcement is a widespread sell-off in wire and cable stocks, with sales of up to 21% for Polycab, Kei Industries and RR Kabel tanks. Investors are concerned that Ultratech’s deep pockets, extensive distribution network and established brand equity may translate into radical pricing strategies that could squeeze profit margins for existing players. CLSA analysts show that Ultratech may be more concerned with wires than cables given the shorter time to go to the market and the strict approval process required for cables.
Despite these concerns, some brokers believe that Ultratech entries are unlikely to significantly affect existing wire and cable players’ revenues until FY28. Nuvama Institutional Stock estimates that even if Ultratech uses 60-70% capacity utilization over three years, its market share in the wire and cable industry remains below 5%. Furthermore, moving from unorganized sectors to organized sectors (which were once accelerated by Ultratech’s entry) could benefit mature participants such as Polycab in the long run.
The basic advantages in the market are in the market
Polycab enjoyed strong operations on the market ahead of the February 27 crash. The stock acquired a 32% stake in 2024, driven by strong revenue stakes and continued growth. However, with the recent plunge, Polycab effectively eliminated all its earnings from the past year, the first year of negative returns in 2025 since the stock market debuted in 2019.
Despite the setbacks, Dokab remains the dominant force in the industry. The company sells a small percentage of every four cables and wires in India and always outperforms its competitors. In Q2 FY25, Polycab reported its highest third-quarter revenue ever ₹5.226 million, marking a year-on-year increase of 20%. Profit after tax ₹464.3 million, while EBITDA increased by 26.4% year-on-year ₹7.199 million, the profit margin increased to 13.8%.
Polycab’s strength lies in its diversified revenue stream and expanding its global footprint. Nearly 80% of its revenue comes from its core line and cable segments, with exports accounting for more than 10% of its total business. The company has secured large orders, including ₹BSNL’s 560 billion contracts strengthened its leadership. In addition, its fast-moving electrical products (FMEG) business is growing rapidly, with FY25 up 45% year-on-year in the second quarter.
Strategic game for future growth
Polycab’s response to growing market competition stems from its “project spring”, an ambitious roadmap for the next five years. The aim of the program is to grow 1.5 times in the industry in the cable and wire sector, while the FMEG business has grown 2 times, with an estimated EBITDA margin of 11-13%.
To achieve these goals, PolyCab plans to invest ₹Capital expenditure of 60 million to 80 million is all funded through internal accruals. The company is leveraging its nearly-debt-free condition and strong cash flow position to expand fuel while maintaining healthy dividend spending over 30%. With the development of urban infrastructure in India expected to surge in the coming decades, Polycab has a good location to take advantage of the growing demand in the power, telecommunications and industrial sectors.
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What does the agent say
Analysts were largely optimistic about Polycab before Ultratech’s announcement. More than 65% of brokerage firms covering the stock have issued a “buy” rating with price targets from ₹7,500 to ₹9,200, which means there is a lot of room for upwards at these levels. Jefferies is one of the most optimistic voices, seeing 50% potential upside, setting a target price ₹9,220.
However, after Ultratech entered the market, some brokers adjusted their valuation multiples. For example, HSBC lowered Polycab’s price target by 20% ₹6,250, citing potential edge pressure. Motilal Oswal Financial Services (MOFSL) also lowered the valuation multiples of Polycab, Kei and RR Kabel by 20%, acknowledging that it will increase the likelihood of competition that affects pricing power.
Still, many analysts remain optimistic about Polycab’s long-term outlook. Citi, UBS and Macquarie continue to rate stocks as “buy” with price targets exceeding ₹8,000, citing the company’s main market share, strong finance and strong expansion plans. They believe that while Ultratech’s entries will bring short-term market annoyance, Polycab’s brand loyalty, extensive distribution and export momentum will help it in the environment.
What are polycab facing?
Although Ultratech’s entries shocked investor sentiment, Polycab’s fundamentals remain intact. The company’s ability to drive pricing pressures, maintain its leadership and continue its export momentum will be a key determinant of its long-term success. Additionally, as Ultratech builds its distribution network and gets approval from regulators, it will face its own challenges before becoming a strong competitor.
Polycab’s commitment to innovation, cost efficiency and global expansion could serve as a crucial buffer against any price wars at UltraTech. Additionally, the company’s strong foothold in the B2B and B2C markets gives it a competitive advantage, and new entrants like Ultratech will take years of replication.
Currently, Polycab’s strong orders, strategic expansion plans and strong financial situation provide a buffer for short-term market volatility. As India’s infrastructure boom continues, Polycab is in a good position to become a leading player in the industry as long as it effectively executes its growth strategy. The coming quarters will be a long-term threat or just a temporary market disruption to assess how companies can adapt to the evolving competitive environment and whether Ultratech’s businesses are truly threatening or simply temporary market disruptions.
For more analysis of this type, read Profit pulse.
About the Author: Suchitra Mandal is a skilled financial writer with expertise in carefully researched insights and detailed analysis of company performance and market trends.
Disclosure: At the time of writing, the author does not hold any shares in Polycab India. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to do their own research and consult a financial professional before making any investment decisions.
