Market Dynamics in Cable & Wire Sector
JM Financial analysts noted robust demand for cable and wire (C&W) products. This buoyancy stems from strong pull from institutional business and preemptive stocking by channel partners anticipating further price increases. The primary driver behind these price expectations is the significant surge in LME copper prices. Copper prices have climbed over 38% in the last five months, soaring from approximately $9,700 per metric ton to a recent high of $13,387 per metric ton.
Robust Demand Meets Rising Input Costs
In response to rising input costs, C&W manufacturers have implemented multiple price adjustments. JM Financial highlighted sequential price hikes of 10-15% in the third quarter, following earlier increases in October and November. Companies have taken additional price hikes in December and January, reflecting the sustained upward trend in copper.
Key Risks Emerge
However, this dynamic introduces considerable risk. Analysts caution that channel partners are hesitant to build excessive inventory, fearing substantial losses should copper prices correct sharply. Such a correction could negatively impact primary off-take for C&W companies. Furthermore, the escalating prices of C&W products are prompting price-conscious real estate developers to explore cheaper, even unbranded, alternatives, directly challenging the market share of established players.
Company Performance and Technicals
Polycab India reported strong financial performance for the third quarter of fiscal year 2026. The company posted a 35% year-on-year growth in net profit, reaching ₹620 crore, supported by a 46% jump in revenue to ₹7,640 crore. This indicates resilient demand and pricing power for at least some major players.
KEI Industries is scheduled to announce its earnings on January 21, with RR Kabel yet to disclose its results date. These upcoming announcements will offer further insight into the sector's performance amidst these fluctuating commodity prices.
Technical Indicators
The recent market trend has seen cable and wire stocks decline in January, with Polycab India shares down 2.6%, KEI Industries off 3%, and RR Kabel down 0.6%, influenced by broader market weakness. Polycab India is currently trading below its 50-day and 100-day moving averages for the fourth consecutive session, though it remains above its 200-day moving average. KEI Industries is testing its 50-day moving average, with its 100-day and 200-day averages below. RR Kabel has fallen below its 50-day moving average for the first time in nearly three months, with its 100-day and 200-day averages also below the current price.