Cable stocks extend losses as Citi flags UltraTech threat; RR Kabel, KEI fall over 3%

Fresh updates from the financial markets indicate that Shares of wires and cables firms remained under pressure on Monday, extending the selloff triggered by UltraTech Cement's entry into the segment, after Citi warned that the new competitive pressure could weigh on near-term valuations of incumbent players.

RR Kabel declined 3.19 percent to Rs 2,375.70 around noon, while KEI Industries declined 3.06 percent to Rs 4,701.50. Universal Cables was down 3.79 percent at Rs 1,516.50 and V-Marc India lost 3.48 percent to Rs 308.95. Polycab India declined 1.27 percent to Rs 8,195.

Havells India was down 0.87 percent at Rs 1,144. That stated, some stocks bucked the trend, with Laser Power & Infra gaining 3.28 percent to Rs 305.35 and Finolex Cables rising 0.74 percent to Rs 1,229.20.

The softness followed sharp losses in cable and wire stocks in the previous session (Friday) after UltraTech formally rolled out its Ultravolt business. Citi stated UltraTech's ambition to become at least the No. 2 player in India's wires and cables market within three to five years could put pressure on near-term valuations across the sector.

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According to Citi, UltraTech's previously announced Rs 1,800-crore capital expenditure plan could backing around Rs 12,500 crore of topline at full utilisation. That would translate into an estimated 7-8 percent market share over the next four to five years.

The brokerage anticipates competitive disruption to be greater in wires than in cables. Among listed incumbents, it sees RR Kabel and Havells as relatively more exposed to UltraTech's entry than Polycab.

UltraTech Cement shares were additionally softer on Monday, falling 1.23 percent to Rs 11,268 around noon. The broader market was weak as well, although several cable stocks saw steeper declines. At 12:10 pm, the Sensex was down 386 points, or 0.5 percent, at 76,130, while the Nifty 50 declined 111 points to 23,787. Most sectoral indices were trading in the red.

UltraTech's entry through the Ultravolt brand has intensified competitive concerns in a market dominated by established players including Polycab, KEI, RR Kabel and Havells. The Aditya Birla Group firm has committed Rs 1,800 crore to the new business and plans a pan-India rollout.

The firm rolled out Ultravolt ahead of its earlier December-end timeline. The business initially focuses on wires and low-tension cables, with UltraTech looking to leverage its extensive building-materials distribution network as it scales up.

Cable stocks had suffered a sharper selloff on Friday following the launch. KEI had fallen more than 8 percent during the session, while V-Marc, RR Kabel and Polycab had declined sharply as market participants assessed the potential impact of a large, well-funded new entrant on competitive pressure, market share and profitability.