UBS Sec initiates coverage on KEI Industries and Polycab

UBS Securities initiated coverage on cable and wires companies KEI Industries and Polycab India with buy ratings. The brokerage sees 26-31% upside in these stocks in the next year. "We expect the cable and wire segment to grow 2 times that of GDP growth in FY24-FY30, driven by capacity expansion, strong domestic demand supported by transmission and

distribution capex and the real estate cycle," said analysts Akshay Gattani and Amit Mahawar in a note to their clients. KEI shares jumped 7.6% and Polycab gained 2.2% on Tuesday.

The brokerage said sales and margin expansions have driven a re-rating for the cable and wires (C&W) segment. It said valuations are in line with the broader market and there are low near-term de-rating risks.


"The strong potential in untapped global markets makes us think near-term oversupply is unlikely in the cable segment," said the analysts. "Driven by transmission capex, power cables are likely to outgrow other C&W segments."