Goldman Sachs sees rising competition amid cable and wire sector's growing attractiveness

Goldman Sachs says Cable and Wire's sectoral attractiveness is raising competition and supply build-up

In its latest note, Goldman Sachs has highlighted that the attractiveness of the cables and wires is raising competition and supply build-up, weeks after Aditya Birla Group's Ultratech Cement announced its foray into the sector. Meanwhile, it has slashed down its target price on Polycab and KEI Industries.

The brokerage has downgraded Polycab to 'Neutral', with a revised target price of Rs 5,005 from Rs 6,510 per share.

On KEI Industries, it has retained its previous recommendation of 'Neutral' but the target price has been slashed down to Rs 3,130 from its previous target of Rs 3,780 per share.

The brokerage remains optimistic on the near-term demand fundamentals of this sector as well as the export potential. As it mentioned, it is waiting for better entry points in the sector stocks now, with Polycab and KEI Industries currently trading at fiscal year 2027 price to earnings ratio of 31x and 29x, respectively.

Some experts believe Ultratech's latest decision could have an impact in the long-term, as it may be able to disrupt the sector easily than the paints business while the leading players in the segment are trading at very expensive multiples. In case UltraTech chooses to be aggressive with pricing in the C&W foray, in order to corner greater market share, the move will negative impact the margins for the business, hurting the existing players.

As of Monday, Polycab and KEI Industries' stocks will now be under focus, with the last trading session closing at Rs 5,003 (down by 0.11 percent) and Rs 3,053 (down by 0.38 percent), respectively.