Shares of major players in India's cables and wires industry, such as Polycab India, KEI Industries, and Havells India, took a sharp hit on Thursday, March 20. The declines came as Adani Enterprises announced its entry into the sector through a joint venture with Praneetha Ventures, intensifying competition in an already competitive market. This follows the recent move by UltraTech Cement to venture into the cables and wires business, further adding to the uncertainty.
Polycab India saw its stock drop by 7.6%, reaching ₹5,021 per share, while KEI Industries experienced a more significant plunge of 15%, hitting a 15-month low of ₹2,802. Havells India fell by 5.5% to ₹1,472 per share, with R R Kabel also losing 4.25%, settling at ₹878.20.
Adani's new venture, Praneetha Ecocables Limited (PEL), aims to manufacture, market, and distribute cables and wires. The company is a joint venture between Adani's Kutch Copper Limited (KCL) and Praneetha Ventures, with KCL holding a 50% stake. The move marks Adani’s strategic entry into the market, adding to competition from other conglomerates like Birla Group, which entered the sector through UltraTech Cement in February.
The market's concerns are compounded by the recent surge in copper and aluminum prices, key materials used in cables and wires. Copper prices exceeded $10,000 per ton on the London Metal Exchange, marking a significant increase. Copper and aluminum together account for up to 75% of the raw material costs for cables and wires, making these fluctuations a critical factor for companies in the sector.
Analysts believe the entry of new competitors like Adani and the Birla Group may not drastically affect earnings in the short term, but they will closely monitor any future announcements that could influence market dynamics. With copper prices up 14% this year, driven in part by geopolitical tensions and potential tariffs, the sector is facing an increasingly complex economic environment.
