Polycab Shares Drop 17% After Ultravolt Entry, But Jefferies Retains Rs 11,100 Target

Polycab India shares have declined 17 percent from their peak in June following UltraTech's entry into the wires and cables sector through its Ultravolt brand. Despite the sharp correction that wiped out significant market value in recent sessions, international brokerage Jefferies has maintained its Buy rating on the stock with a price target of Rs 11,100 per share, pointing to robust underlying demand and deep distribution moats as drivers for potential upside.

The stock closed its previous session at Rs 8,369.50 apiece, trading at 35 times one-year forward price-to-earnings, which sits approximately 7 percent below its historical five-year average. Following management meetings at the Jefferies India Forum 2026, analysts Sonali Salgaonkar and Saurabh Kulkarni underscored that market concerns over competitive pricing pressure may be overstated given the structural barriers inherent in cable manufacturing compared with consumer goods.

Addressing investor concerns over potential margin erosion from new market entrants, Jefferies drew a sharp distinction between the cables and wires industry and fast-moving consumer goods sectors like paints. While launching ancillary product lines in consumer categories involves minimal friction, heavy cable manufacturing demands strict technical verifications.

Extra-high voltage and specialised application cables require rigorous certification for durability and usage, imposing extended gestation periods. Low-voltage and medium-voltage cables similarly mandate established standard certifications. Furthermore, Polycab maintains a heavier revenue weighting toward specialized cables rather than basic wires, which carry lower barriers to entry and lighter margins.

Polycab has reiterated its double-digit volume growth guidance across most upcoming quarters for the next two to three years, following an 18 percent year-on-year volume expansion in fiscal year 2026 that outpaced most industry peers. Jefferies projects the broader cables and wires market to compound at 11 to 12 percent annually, with Polycab targeting growth running at 1.5 times the overall industry rate.

Power infrastructure acts as a primary demand anchor, accounting for 40 to 45 percent of total requirements, propelled by power generation, renewable energy investments, and transmission network expansion. Housing sector activity also remains resilient, where residential wiring constitutes roughly 70 percent of localized demand. Overall company sales are forecasted to register a compound annual growth rate exceeding 20 percent over the 2027 to 2029 period.

EHV transmission cables in India are governed by statutory standards including BIS IS 7098 (Part 3), IEC 60840, and IEC 62067, requiring accredited CPRI type-testing and utility pre-qualification. The Indian wires and cables industry grew annually to reach roughly ninety thousand crore rupees in FY twenty-five, propelled by residential real estate completions, infrastructure capex, and formalization.

Input cost pressures have intensified after copper prices jumped more than 43 percent year-on-year in the second quarter of fiscal 2027. However, Polycab has successfully navigated these fluctuations through established pass-through mechanisms, avoiding major demand disruptions from retail price adjustments.

While raw material swings can occasionally influence short-term channel stocking as distributors adjust inventory levels ahead of price shifts, operating margin guidance of 11 to 13 percent has been structured to absorb competitive sensitivities. Management retains its capital expenditure projections at Rs 14 billion to Rs 15 billion annually through 2029, with projected profit after tax compounding at over 22 percent.