Adani Enterprises recently made headlines with its strategic entry into the cables and wires industry, forming a joint venture with Praneetha Ventures. The new company, Praneetha Ecocables Limited (PEL), is a significant move in a sector already witnessing heightened competition.
The incorporation of PEL was finalized on March 19, 2025, with Adani’s wholly owned subsidiary, Kutch Copper Limited, retaining a 50 percent stake. Adani’s stake signifies its ambitious expansion plans in manufacturing, marketing, and distributing cables and wires, aiming to tap into the growing market demand.
Adani Enterprises established the joint venture with an authorized share capital of Rs 10 lakh divided into 100,000 equity shares of Rs 10 each, revealing a clear commitment to invest in this burgeoning sector. This shift comes shortly after the Aditya Birla Group’s UltraTech Cement ventured into cables and wires, seeking to invest Rs 1,800 crore, marking intensified competition in the industry.
The market reacted strongly to the news of Adani’s entry. Shares of significant competitors faced fresh selling pressure on March 20, 2025, as investors assessed the potential of new competition. Major players, including Polycab India, KEI Industries, Havells India, and Finolex Cables, experienced notable declines amid rising costs for copper and aluminum.
Polycab India’s stock saw a significant drop, reaching an intraday low of Rs 4,912.75, down 9.72% from the previous close of Rs 5,441.75. This decline has been pronounced over the past year, with its stock trading sharply lower from its previous 52-week high. KEI Industries also faced a dramatic fall, hitting a 15% lower circuit of Rs 2,787.55 per share on the same day, significantly impacting its recent market capitalization.
Meanwhile, Havells India and Finolex Cables saw their shares plummet 5.56% and 4.77%, respectively. The overall trend has investors worried about the implications of an oversaturated market amid rising production costs and pressure on profit margins from existing cable manufacturers.
Adani’s entry not only signals internal competition among giants but also various market dynamics that influence share prices. The competitive landscape seems poised for profound changes, as the players adapt to new market entrants. Adani’s existing cement distribution networks could be pivotal in fast-tracking the reach of its new cable products across India, tapping both urban and rural markets efficiently.
Analysts are also highlighting the impact of materials costs, especially as prices of copper and aluminum continue to rise. This inflationary pressure complicates the situation for existing companies already grappling with their bottom lines. The potential for diminished profitability within the industry raises significant concerns for stakeholders.
In terms of stock performance, all companies under scrutiny, including KEI and Polycab, are revealing vulnerabilities due to the heightened scrutiny over their pricing strategies and competitive advantages. According to market sources, the cumulative market capitalizations of these companies are currently under siege due to these shifting tides.
Moreover, Adani’s recent developments are not isolated incidents. The company, through its subsidiary Kutch Copper, is constructing a state-of-the-art copper smelter in Mundra, which will reportedly involve an investment of approximately $1.2 billion. This facility aims to produce half a million tonnes annually, significantly aligning with India’s goals of self-sufficiency in copper production.
As of now, analysts like those from Jefferies and Ventura Securities retain a cautiously optimistic view on Adani Enterprises, revising ratings to 'buy,' with price targets indicating potential growth. Jefferies maintains a target of Rs 3,800 per share based on anticipated net positive cash flows and strategic asset monetization. These forecasts hinge on the success of infrastructure expansions within Adani’s broader operational strategy.
In summary, the entry of Adani Group into the cables and wires market is unfolding against a backdrop of considerable uncertainty and competition. The challenges presented by rising costs, combined with shifts in market dynamics following the announcement, have notable implications for established players grappling with their own profitability and shareholder confidence. As the industry evolves, only time will reveal how these competitive forces will reshape the landscape moving forward.
Investors and market analysts continue to monitor these developments closely as they unfold and impact the industry as a whole.
