Ultratech disrupts a sector!

Ultratech Cement is the market disruptor today, giving the jitters to the entire cables and wires making industry. Listed stocks in the sector, Polycab, currently India’s largest cables & wires company hit the 10% LC at Rs.5189, so did KEI Inds, hitting the 20% LC of the day and is now trading at Rs.3112.10, down more than 18%. Havells hit a new 52-week low at Rs.1402.40 and RR Kable too hit a new low at Rs.962.20. Except for Polycab at the moment, all three stocks lead the top five losers on the BSE.

And it is not as though Ultratech is having a field day; the stock is also down over 5% at Rs.10390 and remains in the red.

Obviously, all around this is a knee jerk reaction to Ultratech’s plan to enter the cables and wires making sector. At a cost of Rs.1800 crore, it will be setting up a plant near Bharuch in Gujarat and is expected to be commissioned by December, 2026. The market has reacted negatively to this news as brokerage houses feel that this impacts Ultratech’s reputation as a pure cement player and we could see the benefits accruing from this foray only by FY28.

At the same time, the established players in the sector got beaten up because the market has concerns that this foray of Ultratech will increase competition, put pricing pressure and this could disrupt the current dynamics of the cables & wires sector.  This beating down of stocks in this sector is an over-reaction as an announcement alone cannot take away the market share; the commissioning of the plant and then the gradual entry will also take time; disrupting established players like Polycab, a market leader will take more than a couple of years.