Shares of Polycab, KEI Industries, RR Kabel, Havells and Finolex Cables crashed on Thursday following UltraTech’s entry into cables & wires (C&W) space.

UltraTech stock also tumbled 6 per cent after analysts anticipated a mild negative reaction following its entry into C&W space as the investors have traditionally viewed the company as a pure-play cement firm.

According to Motilal Oswal, other players in the space may experience a de-rating in valuation multiples.

• Also read: UltraTech ventures into wires, cable manufacturing with ₹1,800 cr investment

Nuvama Institutional Equities remains bullish on KEI, Polycab and Havells in the space, and emphasised that UltraTech’s entry is unlikely to have any impact on FY25–28 earnings of C&W players. However, it added that it may have only a modest impact, at best, in FY28 or onwards.

The brokerage has estimated that the space is heading for a balanced demand-supply scenario over the next 3-4 years.

However, ICICI Securities believed that margins of players may contract in coming years due to aggressive pricing by Ultratech, if any.

Motilal Oswal has slashed target valuation multiple for all C&W players, revised target price on Polycab to ₹6,950 from ₹8,380 earlier with buy rating; downgraded KEI Industries to neutral at a revised target price of ₹4,000 from ₹4,780 earlier; and maintained neutral stance on Havells at a target price of ₹1,650, cut from ₹1,740.

Analysts of JM Financial has maintained buy on UltraTech at a target price of ₹13,000, stating that its return ratios are poised to improve structurally over the next 3-4 years owing rising asset turnover, low cost of expansions and rising profitability.  

• Also read: Polycab India shares surge 2.5% as revenue exceeds five-year target

Shares of Polycab, KEI Industries and RR Kabel descended 19 per cent, while Havells and Finolex fell 6 per cent.

Polycab traded at ₹4,867.25 on the NSE, lower by 15.58 per cent as at 12 noon. KEI Industries crashed 19.11 per cent to ₹3,071.95, RR Kabel slumped 13.07 per cent to ₹965.35.

Havells declined 5.69 per cent to ₹1,459.90 and Finolex Cables plunged 6.03 per cent to ₹841.70.

UltraTech shares fell 5.66 per cent to ₹10,344.10 as at 12.05 pm, after hitting an intraday low of ₹10,264.40.