Cable stocks in focus after Jefferies and UBS cut target prices by up to 16%

Global brokerage firms Jefferies and UBS have lowered their price targets for two cable and wire companies, despite UltraTech Cement Limited, India’s largest cement company, providing clarification on its new business venture and future plans.

Here are the two cable stocks in focus following the target price reductions by Jefferies and UBS:

1. Polycab Limited

With a market cap of Rs. 72,492.5 crores, the shares of India’s largest manufacturer of wires and cables surged 4 percent on BSE to Rs. 4582.3, during Monday’s trading session.

Jefferies has reduced its price target by nearly 16 percent, lowering it to Rs. 6,485 from the previous target of Rs. 7,700, and maintained a “buy” recommendation on Polycab. This suggests a potential upside of around 35 percent from its current trading price of Rs. 4,812.5.

Additionally, UBS has cut its target for Polycab by around 14 percent, revising it down to Rs. 7,700 from Rs. 9,000, which was one of the highest targets set for the stock, leading to an upside potential of 60 percent.

The brokerage noted that Polycab is now trading at 27 times FY26 earnings, which is below its historical average. It anticipates a strong CAGR in Polycab’s sales and net profit, projecting growth of 22 percent and 28 percent, respectively, from FY25 to FY27. Jefferies also expects no significant impact on the company during this period due to UltraTech’s market entry.

According to Jefferies, the company’s sales and PAT CAGR will be driven by the cables and wires business, new orders, and improvements in its FMEG (Fast Moving Electrical Goods) segment.

The brokerage attributed the price target cut to current market conditions and the anticipated rise in competition beyond 2027. In Q3 FY25, the company’s revenue from operations grew by around 20.4 percent to Rs. 5,226 crores, while the net profit grew by nearly 11 percent YoY to Rs. 457.6 crores.

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2. KEI Industries Limited

With a market cap of Rs. 29,566.8 crores, the stock surged about 5.3 percent on BSE to Rs. 3,251.7 during Monday’s trading session. The global brokerage firm UBS has lowered its price target for KEI Industries by approximately 12 percent, reducing it from Rs. 5,700 to Rs. 5,000, which suggests a potential upside of around 61 percent from its current trading price of Rs. 3,095.

The brokerage notes that UltraTech’s aggressive pricing strategy seems unlikely, as the company is more focused on achieving industry-level profitability in the segment and targeting a Return on Capital Employed (RoCE) of 25 percent.

In Q3 FY25, the company’s revenue from operations grew by around 20 percent to Rs. 2,467.3 crores, while the net profit grew by nearly 9.4 percent YoY to Rs. 164.8 crores.

These price target reductions come despite UltraTech’s statements that it has no plans to expand into additional businesses and that its current diversification efforts are strategic. UltraTech also highlighted its focus on maximizing utilization without oversaturating the market with supply.

Written by Shivani Singh

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