Motilal Oswal raises EPS estimates, expects strong 2Q revenue growth for Polycab, KEI Industries and RR Kabel

Domestic brokerage firm Motilal Oswal has retained its bullish outlook on cables and wires (C&W) stocks, citing limited competition, reasonable valuations, and the sector’s underperformance over the past year.

The brokerage believes that competitive intensity in the sector is unlikely to be as high as initially anticipated, despite entry announcements by new players such as Ultra Cement and the Adani Group.

Ultra Cement has since clarified that it does not intend to accelerate its planned ₹18 billion investment beyond what was announced on February 25 for its foray into the C&W sector. Similarly, no concrete plans have emerged from the Adani Group following the establishment of Praneetha Ecocables, a JV by its subsidiary Kutch Copper, in March 2025.

Meanwhile, the brokerage’s recent conference and subsequent discussions with participants in the C&W industry indicate continued robust demand momentum, led by the power sector, infrastructure investments, emerging segments such as EVs and data centers, and improving real estate demand.

While investors have expressed concerns about the sustainability of this momentum in recent quarters, the brokerage believes the inherent demand drivers remain intact.

It highlighted some of the key factors supporting this momentum, including infrastructure development through investments in roads and railways; expansion in the power sector, particularly renewable energy and T&D capex; growth in new avenues such as data centers and electric vehicles; and ongoing traction in real estate and individual housing.

The brokerage also noted that companies will pass on raw material (RM) price increases to customers. Last month, copper and aluminum prices increased 3%, with average prices in 2QFY26 (QTD) rising 6% and 9% QoQ and 10% and 14% YoY for copper and aluminum, respectively.

Thus, the brokerage expects the combination of rising RM prices and healthy volume growth to translate into near-term price increases of 3% for wires and 4–5% for cables, sustaining robust revenue growth in 2QFY26, and believes that the sector’s demand tailwinds will persist for several more years.

Brokerage sees 3–5% EPS upside

Considering a robust 2QFY26, the brokerage has upgraded its EPS estimates for Polycab, KEI Industries, and RR Kabel by approximately 3–5% for FY26E and 2–4% for FY27E/28E. It also finds the valuations for Polycab and KEI Industries reasonable.

On ratings, it upgrades KEI Industries to 'Buy' from the earlier 'Neutral,' revising the target price to ₹4,700 per share, and retains its 'Buy' call on Polycab with a price target of ₹8,750 per share. For RR Kabel, it maintains a 'Neutral' rating with a price target of ₹1,340 per share.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.