India’s cables and wires industry is entering a prolonged growth phase driven by infrastructure spending, electrification and manufacturing investments, according to CLSA, which has initiated coverage on three listed companies in the sector. The brokerage has assigned ‘Outperform’ ratings to RR Kabel and Polycab, while recommending ‘Hold’ for KEI Industries. CLSA stated that demand continues to outpace supply risks, allowing incumbent companies to defend market share while benefiting from rising formalisation and global grid investments. The brokerage expects operational leaders to capture a larger share of industry growth over the coming years.
CLSA on RR Kabel: ‘Outperform’
CLSA has initiated coverage on RR Kabel with an ‘Outperform’ rating and a target price of Rs 2,850, implying an upside of 14.3% from the reference price used in the report.
The brokerage pointed out that RR Kabel’s established distribution network, export franchise and integrated manufacturing capabilities position it well to benefit from the industry’s next phase of expansion. According to CLSA, the company has built competitive advantages that should help it defend profitability even as new players expand capacity.
“Distinguished moats of entrenched distribution network, influencer engagement, export leadership and integrated manufacturing should help drive growth and profitability, despite risk of new entrants,” CLSA says.
The brokerage also notes that product breadth, manufacturing capabilities and operational execution will become increasingly important as competition rises. Companies that execute well while maintaining efficient operations are expected to strengthen their market position.
CLSA on Polycab: ‘Outperform’
CLSA has initiated coverage on Polycab with an ‘Outperform’ rating and a target price of Rs 10,150, implying an upside of 13.9%.
The brokerage said Polycab remains one of the strongest-positioned companies in the sector because of its diversified product portfolio, extensive distribution reach, established brand and cost leadership. CLSA believes those strengths leave the company well placed to capture additional demand as infrastructure spending and electrification continue to support industry growth.
“Well-positioned to capitalize on structural growth opportunity, supported by portfolio breadth, distribution scale, brand strength and cost leadership,” CLSA says.
According to the brokerage, companies with wider product offerings and stronger distribution networks are likely to retain pricing power and gain wallet share as customers increasingly prefer established suppliers.
CLSA on KEI Industries: ‘Hold’
CLSA has initiated coverage on KEI Industries with a ‘Hold’ rating and a target price of Rs 4,800, implying a 1.4% downside.
The brokerage said KEI remains a technically capable company with a strong execution record and is well placed to benefit from growing demand for high-voltage cables. However, the current valuation limits further upside compared with RR Kabel and Polycab.
“Benefits from the shift towards high voltage cables, with strong technical capabilities and execution track record,” CLSA added. .
While CLSA acknowledges KEI’s strengths, it sees a relatively better risk-reward profile in RR Kabel and Polycab at current valuations.
Why CLSA remains positive on the cables and wires sector
According to CLSA, the industry is benefiting from multiple long-term demand drivers, including electrification, real estate recovery, infrastructure investment, manufacturing capital expenditure and the rapid expansion of digital infrastructure.
The brokerage estimated that, even after the industry’s capacity doubled over the past five years, there is room for further doubling over the next five years. It also expects rising formalisation, which it estimates could reach 85% by FY30, along with global grid investments and supportive commodity trends, to support leading companies.
“The stars are aligned for a sustained growth cycle in Indian cables & wires,” CLSA pointed out.
On the supply side, the brokerage acknowledged that capacity additions from both incumbent companies and new entrants is likely to increase competition. Even so, it believes the risks remain manageable because demand growth is expected to outpace incremental supply over the medium term.
“While the demand story is well established, the key debate centres on the impending supply additions as incumbents and new entrants vie for a larger share of the market. That said, we view the risks as manageable,” CLSA added.
Conclusion
CLSA has made a distinction between the sector’s growth outlook and stock selection. The brokerage expects the cables and wires industry to continue benefiting from sustained demand across infrastructure, electrification and manufacturing, while competition gradually intensifies as fresh capacity comes on stream.
Within that backdrop, it prefers RR Kabel and Polycab given the distribution reach, manufacturing strengths, and operating capabilities that provide a stronger foundation for long-term growth.
Disclaimer: The stock ratings, target prices, and investment commentary featured in this report are sourced from CLSA’s research and are provided for informational and educational purposes only. This content does not constitute financial advice, an offer, or a solicitation to buy or sell any security or financial instrument. Equity investments are subject to market risks, and stock valuations may fluctuate based on market conditions. Readers should evaluate their risk tolerance and consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.