UltraTech Cement, an Aditya Birla group company, is riding on its retail and B2B reach to make a splash in the cables and wires (C&W) market which it plans to enter late next year.
The company has helped its distributors set up 4,432 UltraTech Building Solutions outlets across India with an eye to increase the share of customers’ wallet to 60 per cent.
A one-stop solution for retail customers, the outlets sell all products needed in construction industry including steel roofing and sheets, sanitary fittings, electricals, plywood and power tools and PVC Pipes and water tanks.
The company has launched 31 new products in water proofing and dry-mix solutions.
UltraTech Cement has proposed to invest ₹1,800 crore for its new wires and cables segment venture and set up a plant near Bharuch in Gujarat. The manufacturing plant is expected to be commissioned by December 2026.
The market for wires has grown at a compound annual growth rate (CAGR) of 17 per cent last fiscal to ₹26,700 crore against ₹12,000 crore logged in FY19. In the same period, the cables market registered a CAGR of 12 per cent to ₹71,000 crore.
In a recent investor call, UltraTech said it targets to achieve a revenue mix of 60 per cent from wires and 40 per cent cables at the optimum utilisation level of the plant by FY31.
It targets to achieve over 20 per cent return on capital employed and internal rate of return of 25 per cent. UltraTech plans no additional capex in C&W in the near future and maintained that the current capacity will suffice till FY31.
Initially, the focus will be on wires, but UltraTech ruled out a foray into HT Cables/EHV segment. It also ruled out pricing/margin pressure in C&W following its entry.
Analysts’ view
Analysts expect no material impact on existing C&W players till FY27. Nuvama Research said even post-FY28, the impact shall be relatively modest for incumbents given the strong growth prospects, strength in retail distribution and significant approvals in cables offerings.
UltraTech’s new capacity of less than 5 per cent of the total industry can be absorbed without big impact by FY31, it said.
Jefferies maintained that over FY25-27, Polycab will record a robust sales CAGR of 22 per cent and profit CAGR of 28 per cent, driven by new orders and improving performance in the Fast Moving Electrical Goods segment.
Centrum Broking said UltraTech investment in C&W will take at least two-three years before any financial impact is visible. The key uncertainty, it added, is whether UltraTech will continue to be the group’s investment vehicle for future ventures, given its strong operating cash flow.
