Wire & cable stocks plunge on UltraTech's entry

Shares of five major wire and cable manufacturers plummeted by 5.07% to 15% on Thursday, following UltraTech Cement's announcement of its entry into the sector.

Polycab India (down 15%), KEI Industries (down 15%), RR Kabel (down 13%), Havells India (down 7.6%) and Finolex Cables (down 5.07%) slumped.

Meanwhile, Ultratech Cement slumped 5.27% to Rs 10390.

UltraTech Cement, a prominent Aditya Birla Group company, revealed its plan to diversify into the wires and cables segment, allocating Rs 1,800 crore for capital expenditure over the next two years. The company aims to capitalize on its established manufacturing prowess and existing customer relationships to deliver high-quality products.

The new manufacturing facility will be strategically located near Bharuch, Gujarat, and is expected to be operational by December 2026. UltraTech's move is driven by the burgeoning demand for wires and cables across residential, commercial, industrial, and infrastructure sectors.

The wire and cable industry has demonstrated robust growth with revenue CAGR of around ~13% between FY19 to FY24. The industry's positive outlook is further bolstered by the ongoing shift from the unorganized to the organized market.

The market's reaction reflects concerns about increased competition within the wire and cable sector, as UltraTech's substantial resources and established brand presence are expected to significantly impact the existing market dynamics.

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