Polycab stock extends winning run to 4th session, gains 3.5% as Morgan Stanley sees 52% upside

Maintaining their winning run for the fourth consecutive trading session, shares of Polycab India, the country’s largest cables & wires company, jumped another 3.5% in today’s intraday trade, March 5, reaching ₹5078 apiece after global brokerage firm Morgan Stanley maintained its bullish view on the company, citing the continued demand in the cables and wires segment and expects limited industry impact on UltraTech’s entry.

It maintained its ‘Overweight’ call on the stock with a target price of ₹7,395, indicating a significant upside of 52% for the stock from its latest closing price.

The brokerage highlighted a strong demand uptick in the cables and wires (C&W) segment so far in Q4, with exports also showing promising growth. Additionally, it noted that Indian C&W players could benefit from the import tariffs imposed by the U.S. on peer countries, potentially providing further upside.

The movement in copper prices, influenced by inflationary trends, is expected to support higher realizations in Q4, benefiting the company’s revenue growth. Meanwhile, Morgan Stanley sees limited industry impact in the next 4-5 years, as UltraTech’s plant ramp-up is expected only by scaling the cable business involves a long gestation period, whereas wires, despite having a shorter approval process, require strong relationships with electricians for wider adoption.

Polycab’s ₹18 billion investment accounts for 10% of the current C&W industry and 3-4% of the projected industry size in FY31. The brokerage expects C&W EBIT margins to remain in the 12-14% range in the near term and tostabilize between 11-13% in the long run.

Earlier, Jefferies also stated that it does not expect any major impact from UltraTech’s entry into the cables and wires segment and maintained its ‘Buy’ call on the stock. However, it trimmed the target price to ₹6,485 per share, citing rising competition beyond 2027. 

Stock tumbles 33% in 3 months

The company’s shares recorded their biggest single-day drop in 13 months on February 27, falling 19% after UltraTech announced its entry into the cables and wires segment as part of its strategy to become a comprehensive ‘Building Solutions’ provider.

The sell-off also resulted in the stock closing the month with a 22% decline, extending its losing streak to the third straight month.

From its December peak of ₹7,595 per share, the stock is currently down 33%. Despite this steep correction on Dalal Street, it is still trading 124% higher over the last three years and 400% higher over the last five years.

The cables and wires industry has been growing rapidly in recent years, driven by strong government focus on infrastructure development, the rising trend of nuclear families, increased electrification in rural areas, and a surge in exports of cables and wires.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.