Slug: `polycab-jefferies-ultravolt-competition-copper-demand`
Jefferies On Polycab: Polycab has taken a 17% hit from its June 2026 peak as UltraTech's Ultravolt entry stirred fears of a tougher fight in wires and cables. But Jefferies believes the selloff may be getting ahead of the fundamentals i.e. demand remains healthy, cable manufacturing has meaningful entry barriers, and prolonged price undercutting may be difficult to sustain.
Jefferies analysts Sonali Salgaonkar and Saurabh Kulkarni, after hosting Polycab management at the India Forum 2026, retained their 'Buy' rating with an unchnaged target price of Rs 11,100, implying around 33%. upside from current levels.
The brokerage estimates 22% PAT CAGR over FY26–29E and expects the company to continue benefiting from volume growth and improving FMEG margins.
The stock now trades at around 35x one-year forward P/E, about 7% below its historical five-year average.
The Ultravolt Fear Meets A Different Cable Reality
Polycab's management said power accounts for an estimated 40–45% of its cables and wires demand, with power generation, renewable energy and transmission and distribution networks among the key drivers.
Jefferies expects the overall C&W market to grow at 11–12% CAGR, roughly twice the real GDP multiplier. Polycab is targeting growth at around 1.5 times the industry rate by expanding into new areas, products and customers while increasing wallet share with existing clients.
The brokerage estimates around 20% sales CAGR for Polycab over FY27–29E.
Why Jefferies Isn't Worried About A Price War Yet
The immediate concern is whether new competition will force Polycab into a prolonged pricing battle.
Jefferies argues that the economics of the cables and wires industry are different from categories such as paints, where launching new SKUs and ancillary products can be relatively straightforward.
In cables, particularly EHV and specialised applications, products require certifications related to usage and durability, creating longer gestation periods. LV and MV cables also require standard certifications.
Wires have lower entry barriers, but Polycab has a higher share of cables in its sales mix.
The brokerage also points to industry profitability. At around 5–7% net profit margin, it believes sustained aggressive price undercutting may not be economically viable over the medium term.
Copper Is Rising, But Demand Has Held Up
Copper prices are up 43% year-on-year (YoY) so far in Q2FY27, but Polycab is not seeing major demand disruption from price hikes because of copper pass-through.
Demand across power, mobility, industry, infrastructure and emerging areas remains healthy, while the housing market is also holding up. Wires account for around 70% of demand in housing, with LV and MV cables making up the balance.
There is, however, a near-term volume caveat. Q2–Q3FY26 had a high volume base, while copper volatility could influence channel stocking as dealers adjust inventories based on their expectations for prices over the next few months.
Jefferies therefore expects C&W sales growth to moderate from the FY26 base.
Polycab's Distribution Network Remains A Key Moat
Jefferies believes scale and distribution remain important advantages for Polycab.
The company can track and fulfil dealer inventory within a day, according to management, giving it an edge in servicing its network.
Polycab has also retained double-digit volume growth for most quarters over the past two to three years, with FY26 volume growth of 18% exceeding that of most peers.
The company's 11–13% C&W operating margin guidance already factors in sensitivity to competition, according to Jefferies.
Jefferies Sees Earnings Compounding
Jefferies forecasts a 22% PAT CAGR for FY26–29E and retains its annual capex estimate of Rs 14,000–15,000 million.
With the stock down 17% from its June peak and trading below its five-year average forward P/E, the brokerage believes the valuation has become more supportive.
For now, the debate around Polycab is less about whether competition has arrived and more about whether it can sustain the pricing pressure needed to materially disrupt a scaled player with a cable-heavy portfolio, certifications and a deep distribution network.
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