JPMorgan Bullish on KEI, Polycab; Forecasts 22% Upside
Overview
JPMorgan launched coverage on KEI Industries and Polycab India with "overweight" ratings, projecting significant upside potential. The brokerage forecasts up to 21.5% gains, citing their exposure to electrification trends and potential EPS upgrades driven by rising copper prices. Despite rising competition from conglomerates, JPMorgan views both firms as well-positioned.
Stocks Mentioned
JPMorgan Initiates Coverage on Wire & Cable Majors
JPMorgan has initiated coverage on KEI Industries Ltd. and Polycab India Ltd., assigning "overweight" ratings and projecting substantial upside potential. The brokerage firm forecasts gains of up to 21.5% for KEI Industries and 15.7% for Polycab, setting price targets of ₹5,250 and ₹8,900 respectively. The ratings were announced on January 12.
Sector Outlook
The brokerage views both Polycab and KEI Industries as offering "picks and shovels" exposure to the fundamental trends of electrification and energy transition. JPMorgan anticipates near-term earnings-per-share (EPS) upgrades for both companies, bolstered by an increase in global copper prices. Their financial year 2027 EPS projections for Polycab and KEI Industries stand 8% to 12% above consensus estimates.
Competitive Landscape
JPMorgan acknowledged that the upcoming entry of large conglomerates into the wires segment, a high-margin and largely organized business, could impact industry margins and return on capital employed (RoCE). However, the firm stated that KEI Industries and Polycab India are better positioned relative to their peers. This competitive pressure comes as Adani Group, through a joint venture, and UltraTech Cement, with a planned capital expenditure of ₹1,800 crore over two years, are expanding into the wires and cables sector.
Analyst Sentiment
In the previous session, KEI Industries shares closed 1.8% lower at ₹4,325, while Polycab shares declined 0.8% to ₹7,690. Over the last six months, KEI Industries stock has gained 15.9%, and Polycab has risen 23% in the past year. Analyst recommendations show a stronger consensus for Polycab, with 25 buy ratings compared to 18 for KEI Industries.
