Whalesbook
Indian Cables and Wires Sector Poised for Strong Growth, Says Motilal Oswal
Motilal Oswal Financial Services has issued a strongly positive report on India's Cables and Wires sector, forecasting significant revenue expansion driven by sustained demand and upward trends in commodity prices. The brokerage highlights a promising outlook for the second half of FY26 and beyond, underpinned by substantial investments in infrastructure and the rapidly expanding data center industry.
Sector's Strong Growth Trajectory
The Indian Cables and Wires industry has demonstrated impressive growth, expanding at an 11 per cent CAGR over the last five years to reach approximately ₹90,000 crore in FY25. Growth accelerated to around 13 per cent between FY23 and FY25, fueled by strong demand from real estate, renewable energy projects, general infrastructure development, and industrial capital expenditure. Motilal Oswal projects this momentum to continue, forecasting a 13–14 per cent CAGR from FY25 to FY30, potentially doubling the market size to about ₹1.9 trillion by FY30. The sector is anticipated to grow 1.5 to 2.0 times faster than real GDP in the near to medium term.
Booming Exports Signal Global Demand
India has solidified its position as a net exporter of cables and wires since FY20. Exports surged from ₹8,300 crore in FY20 to ₹19,800 crore in FY25, marking a 19 per cent CAGR. In the first half of FY26, exports reached ₹11,800 crore, a 30 per cent year-on-year increase, with net exports up 38 per cent, indicating strong international demand. Key export markets like Germany and the US showed significant growth (65 per cent and 63 per cent respectively) in Apr-Sep’25. The US now accounts for 25 per cent of total exports. Despite new US tariffs, KEI Industries and RR Kabel reported substantial export revenue jumps in Sep–Oct 2025, contrasting with Polycab India's decline. Globally, the market is estimated at $300 billion with a 10 per cent CAGR, where Indian manufacturers are competitive due to quality, cost, and global certifications.
Data Centers Drive Structural Demand
The rapid expansion of India's data center market, projected to grow at 26 per cent CAGR to around $10 billion, presents a significant, long-term demand driver for cables. Major players have committed over $50 billion for data center expansion over the next 5-7 years, spurred by digitalization, cloud adoption, and AI workloads. Cables typically represent 5-10 per cent of a data center project's capital expenditure. Each megawatt of new data center capacity can generate approximately ₹3.5 crore in cable demand, creating a substantial growth opportunity for specialized manufacturers.
Commodity Price Trends and Margin Protection
Prices for key raw materials, copper and aluminium, have risen significantly since May 2025, with copper up 10 per cent and aluminium up 8 per cent year-to-date. Copper prices are expected to remain elevated due to current demand-supply dynamics. Brokerages anticipate that these increased raw material costs will boost overall revenue, as companies effectively pass on higher expenses through frequent retail price revisions and contractual clauses for large orders. This strategy helps largely protect their profit margins.
Brokerage Ratings and Targets
Motilal Oswal Financial Services has reiterated its 'Buy' rating on Polycab India with a target price of ₹9,110 and on KEI Industries with a target price of ₹4,960. The brokerage maintained a 'Neutral' rating on Havells India, setting a target price of ₹1,640, and also rated RR Kabel 'Neutral' with a target price of ₹1,470. These ratings reflect the brokerage's view on individual company performance within the promising sector outlook.
Financial Outlook and Projections
For its covered companies, Motilal Oswal estimates a revenue and Earnings Before Interest and Tax (EBIT) Compound Annual Growth Rate (CAGR) of 17 per cent and 16 per cent respectively, from FY26 to FY28. This is slightly lower than the 18 per cent revenue and 19 per cent EBIT CAGR recorded during FY24–26E. EBIT margins are projected to expand by 1.0 percentage points year-on-year to 12.3 per cent in FY26 and are expected to stabilize at this level through FY28.
Impact
This positive outlook is expected to drive stock price appreciation for companies like Polycab India and KEI Industries. Investors may see increased interest in the broader Cables and Wires sector, potentially leading to higher valuations for well-positioned players. The sector's growth story, driven by domestic capex and exports, aligns with India's broader economic development goals.
Impact Rating: 8/10
Difficult Terms Explained
CAGR: Stands for Compound Annual Growth Rate, a measure of average annual growth over a period longer than one year.
EBIT: Earnings Before Interest and Tax, a measure of a company's operating profitability.
FY26: Refers to the Financial Year 2025-2026.
Y-o-Y: Year-on-Year, comparing a period to the same period in the previous year.
SKUs: Stock Keeping Units, unique identifiers for products in inventory.
Hyperscalers: Large cloud computing providers like Amazon Web Services, Microsoft Azure, and Google Cloud.
Colocation Providers: Companies that offer space, power, and cooling for other companies' data center hardware.
MW: Megawatt, a unit of power.
Y-T-D: Year-to-Date, the period from the beginning of the current calendar year up to the present time.