Polycab, Havells, KEI Shares Drop as Adani Enters Cables & Wires Market

Adani’s Joint Venture ‘Praneetha Ecocables’ Triggers Market Reaction

Shares of leading Indian cable and wire manufacturers—KEI Industries, Polycab, and Havells—plunged on March 20, following the Adani Group’s entry into the segment through a new joint venture. The significant sell-off in these stocks indicates investor concerns over heightened competition in an industry dominated by established players.

Adani Enterprises Announces Foray into Cables & Wires Industry

• Adani Enterprises, in a post-market filing on March 19, revealed that its wholly-owned subsidiary, Kutch Copper, has incorporated a new joint venture, ‘Praneetha Ecocables Limited’, in collaboration with Praneetha Ventures.
• Equity Structure: Kutch Copper and Praneetha Ventures will hold equal stakes of 50% in the newly formed company.
• Business Focus: The joint venture will focus on the manufacturing, marketing, distribution, and sale of metal products, cables, and wires.

Market Impact: Sharp Decline in Leading Cables and Wires Stocks

Following the announcement, investors reacted sharply, leading to a sell-off in major players in the cables and wires segment.

1) Polycab India Sees Nearly 9% Decline

• Polycab India, one of the industry leaders, witnessed a sharp drop of nearly 9%, with its stock trading at ₹4,972 per share on March 20.
• This correction comes just a day after a nearly 5% surge, where the stock closed at ₹5,438.40 on March 19.
• Yearly Performance: The stock has declined over 32% in the past year, reflecting concerns over increasing competition and industry challenges.

2) KEI Industries Faces Biggest Drop, Down Over 13%

• KEI Industries shares plummeted over 13%, trading around ₹2,855.15 per share in intraday trade.
• The stock had already been facing downward pressure, having hit a 52-week low of ₹2,902.85 in February 2024.
• Annual Performance: The stock has lost nearly 36% of its value over the past year, driven by a combination of sectoral headwinds and emerging competition.

3) Havells India Declines Over 5%

• Havells India also saw a notable dip, with its stock price falling over 5% to ₹1,479 per share.
• Interestingly, this decline follows a significant surge in the previous session after the government exempted key electrical components from mandatory BIS certification, easing supply chain concerns.
• One-Year Performance: The stock has lost nearly 12% in value over the last 12 months, amid market volatility and changing regulatory dynamics.

4) RR Kabel Drops Nearly 2%

• RR Kabel shares declined nearly 2%, trading at ₹903 per share.
• This comes after the stock hit a 52-week low of ₹854 per share on March 19.
• Annual Performance: RR Kabel has been one of the worst-hit stocks in the sector, down over 37% in the past year.

Adani’s Entry Adds to Competitive Pressure in the Industry

The Adani Group’s aggressive diversification strategy into the cables and wires segment marks a significant competitive challenge for existing players like Polycab, KEI, and Havells. The move follows:

• Adani’s Expansion Plans: The group’s ongoing expansion into multiple infrastructure and industrial segments, including power transmission and electrical equipment.
• Increased Competition: The arrival of a major conglomerate into an already competitive sector is likely to intensify pricing pressures and reduce market dominance for existing players.

Aditya Birla Group’s Entry Adds to Industry Disruptions

The Adani Group is not the only new entrant in the cables and wires business. Just days before, the Aditya Birla Group announced that UltraTech Cement will be setting up a cables and wires manufacturing plant in Bharuch, Gujarat, with an investment of ₹1,800 crore over the next two years.

• This signals a major shift in market dynamics, with large conglomerates expanding their presence into segments traditionally dominated by specialized cable and wire manufacturers.
• The combined impact of Adani’s and Aditya Birla’s foray into the sector has spooked investors, leading to widespread stock corrections in existing players.

Uncertainty and Strategic Adjustments

With Adani’s Praneetha Ecocables set to begin operations, investors are reassessing their positions in long-established companies. Analysts believe:

• Short-term pressure on stock prices is likely as institutional investors digest the competitive impact.
• Market leadership of companies like Polycab and KEI may face challenges unless they adopt aggressive expansion and pricing strategies.
• Broader industry trends, regulatory developments, and infrastructure investments will dictate long-term sector performance.

As the cables and wires sector enters a new phase of competition, the coming months will be crucial in determining the market positioning of both existing players and new entrants like Adani and UltraTech Cement.