BofA initiates coverage on Polycab, KEI with buy ratings; sees up to 22% upside
The brokerage set a price target of ₹11,000 for Polycab, implying 22% upside, and ₹6,300 for KEI, suggesting 14% upside.
Polycab shares fell 0.4% to ₹9,035 on Thursday, while KEI gained 0.1% to ₹5,538.90.
The brokerage values both stocks at 40 times two-year forward earnings, or 1.5 standard deviations above their historical averages. It prefers Polycab and KEI over Havells.
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BofA expects India’s wires and cables industry to grow at a 14% compound annual rate between FY26 and FY29, supported by spending on infrastructure, renewable energy and power grids, as well as exports.
Polycab, which leads the industry with a 24% market share, is BofA’s preferred play on franchise quality. The brokerage expects its revenue to grow at a 19% CAGR through FY29, helped by market-share gains and higher exports. It expects earnings to grow at an 18% CAGR over the period.KEI, with a 9% market share, offers a faster growth profile. BofA expects revenue and earnings to grow at 22% and 20% CAGRs, respectively, through FY29, supported by capacity expansion and an improving product mix. Its Sanand plant is expected to drive the next leg of growth as capacity ramps up.
A key investor concern has been the risk of excess capacity as new competitors enter the industry. BofA estimates oversupply at just 2% by FY28-29.
