Polycab, KEI Industries, RR Kabels shares can rise up to 25%; here's why

JM Financial has initiated coverage with a 'buy' rating on three wire stocks. Polycab India  has a received a price target of ₹7,900 per share, representing a potential upside of 17.8% from its recent closing price of Rs 6,705.5. The brokerage highlights Polycab's commanding market presence in the cables sector, which ensures a valuation premium due to its superior margin profile and strong return on equities and capital employed. Despite slower growth compared to competitors like KEI Industries, Polycab's strategic positioning provides a robust cash generation profile over the financial years 2025 to 2028.

Shares of Polycab India, KEI Industries and RR Kabel, witnessed up to a 4% rise in share prices on Monday buoyed by positive sentiment from JM Financial's market assessment. The cables and wires industry in India, valued at ₹90,000 crore in FY25, is projected to grow at a compound annual growth rate of 12% to reach ₹1.25 lakh crore by FY28. JM Financial notes that the risk factors for this sector include potential underperformance in housing infrastructure, power transmission, and distribution, along with volatility in raw material prices and forex rates.

Competitively, JM Financial rates both Polycab India and KEI Industries as "buy," with KEI Industries projected to see a 25% upside at a target price of Rs 4,500 from its last close of Rs 3,612.3. With RR Kabel also receiving a "buy" rating, the sector's growth is expected to be driven by organised players, supported by increasing regulatory approvals and capex requirements. The brokerage believes new entrants will likely impact smaller, unorganised industry players rather than established market leaders such as Polycab India, which continues to maintain a diversified channel mix and a strategic focus on delivering superior returns.