The cable and wire companies reported a strong performance in the March 2025 quarter, aided by robust demand across categories, improvements in channel inventories, and a pickup in infrastructure activities. The operating profit margins also improved, supported by cost efficiencies, favourable product mix and operating leverage benefits.
Data compiled from the Reuters-Refinitiv database for six industry players showed aggregate year-on-year revenue and PAT growth of 22.5% and 24.9%, respectively — significantly outpacing the Nifty 500 index, which posted top-line and bottom-line growth of 6% and 9%, respectively.
Historical industry perspective
Strong return ratios, market share gains, ability to generate healthy operating cash flows and focus on deleveraging supported the performance of organised players in the last few years. While the unorganised players lost market share due to limited cash flows and higher working capital requirements, organised players strengthened their position through capacity expansion, says an Ambit Capital report of May 2025. Such increased investments created the benefits of economies of scale.
The scale benefits led to high cash flow generation that supported deleveraging and reinforced organised players. These, coupled with initiatives like focus on brand building, distribution expansion, campaigns creating awareness around safety, loyalty programs and improved relationships with electricians, further supported the overall performance of organised listed players.
Recent concerns
The announcement of the entry of Aditya Birla and the Adani group in the industry in February-March this year created fears of increased competition and led to increased volatility in the share prices.
Experts believe that the near-term impact of new entrants is limited amid long gestation periods and entry barriers involving product approvals and performance validation. The management commentaries remain optimistic about the sustained growth over the next few years.
Furthermore, strong demand is expected to lead to a supply deficit. A PhillipCapital report estimates an organised market supply deficit as the manufacturing capacity will fall short of demand. It says that even the unorganised market is unlikely to bridge the demand gap. However, the PhillipCapital report has raised concerns about the pressure on EBITDA margins (due to new entrants) as the companies will have to increase distribution margins to push sales. This will result in slower EPS growth.
A sharp increase in capex is expected in 2025–26 to meet rising demand
Strong demand tailwinds
The industry is likely to see strong demand growth from government and private capex in industries such as power (Transmission and Distribution), real estate, railways, oil and gas, renewable energy and emerging applications in data centers and EVs. Furthermore, benefits from China Plus One and robust export opportunities (in the US/Europe markets) provide additional growth catalysts for the sector.
C&W industry is expected to grow at a CAGR of 13% between 2024-25 and 2029-30
To explore export opportunities, Indian companies are securing product-level certifications crucial for exports. A recent Motilal Oswal report says that the global investments in renewable energy are creating sustained demand for low and medium voltage cables, where Indian players have strong capabilities and cost advantages. It estimates the cables and wires industry to grow at a CAGR of 13% over 2024-25 and 2029-30, whereas the exports are expected to grow at a 14% CAGR during the period.