Shift to Advanced Cables

India's electrical cable sector is transforming, moving towards higher-value products critical for digital infrastructure. Companies are now providing essential components for India's digital future, going beyond traditional demand.

Data Centers Drive Industry Growth

The Indian wires and cables industry, a key part of the nation's industrial landscape, is undergoing a major change. While infrastructure, power, and real estate remain important, emerging sectors like data centers, electric vehicles, and renewable energy are reshaping demand. The rapid adoption of Artificial Intelligence and cloud computing is the main driver, speeding up data center construction across India. Projections show India's data center capacity could grow from 1,337 MW in FY25 to over 3,395 MW by FY30, adding 2,058 MW. This expansion offers an estimated total EPC (Engineering, Procurement, Construction) opportunity of ₹46,400 crore. The wires and cables sector is expected to capture about ₹4,600 crore, averaging ₹927 crore annually. This surge in demand for specialized, Extra High Voltage (EHV), and fiber-optic cabling is starting a new growth cycle, supported by forecasts predicting the industry's value to rise from ₹90,000 crore in FY25 to ₹1,57,500 crore by FY30. Companies are responding with strategic capacity expansions, especially in the EHV segments.

Key Players Boost High-Voltage Capacity

Major Companies Invest in EHV

Polycab, India's largest player in the electrical sector with a 30% share in organized wires and cables, reported ₹28,884 crore in FY26 revenue. Its 'Project Spring' strategy includes ₹6,000-8,000 crore in capital expenditure over five years, with a strong focus on wires and cables capacity. New Extra High Voltage (EHV) capacity is expected by late 2027. Polycab leverages its extensive distribution network (90% of sales) and targets data centers, renewable energy, and defense sectors, aiming for 1.5x to 2x market growth. Its FY26 EBITDA grew 35% to ₹4,006 crore, with margins at 13.9%.

R R Kabel surpassed $1 billion in revenue in FY26, generating ₹9,722 crore. Its core wire and cable segment accounts for 90% of revenue. A ₹1,200 crore capital expenditure is underway to produce EHV cables up to 220 KV by FY28, addressing capacity utilization exceeding 90%. Management sees data centers, wind, and solar energy projects as key growth drivers, targeting 16-18% year-over-year volume growth by expanding its B2B segment and securing client approvals. However, 26% of its revenue comes from exports, with the Middle East representing 12% of its total income, which poses a short-term export challenge. FY26 EBITDA rose 62% to ₹789 crore, with margins expanding to 8.1%.

KEI Industries, with ₹11,748 crore in FY26 revenue, is expanding its manufacturing base, including a second phase of its Sanand plant by Q4FY27, projecting up to 20% volume growth in FY28. Data centers are a significant driver, particularly for its export business in the American market. After a temporary slowdown due to U.S. tariffs, KEI has resumed U.S. operations, focusing on medium-voltage HD cables. Backward integration into PVC compounds and galvanized steel wire aims to protect margins. FY26 EBITDA increased 31% to ₹1,388 crore, with margins at 11.8%.

Valuations and Sector Performance

As of May 8, 2026, Polycab trades at a P/E of 51.2x, RR Kabel at 43.4x, and KEI Industries at 53.1x. These valuations are significantly higher than the industry median P/E of 25.6x. Polycab leads in return ratios (ROCE 34.3%, ROE 24.5%), followed by RR Kabel (ROCE 25.8%, ROE 20.8%) and KEI Industries (ROCE 20.1%, ROE 14.8%). Current market capitalizations show Polycab around INR 1.4 lakh crore, RR Kabel approximately INR 25,000 crore, and KEI Industries roughly INR 20,000 crore. The broader Indian Electrical Equipment sector has seen year-to-date performance of about +12%, indicating steady but relatively conservative growth compared to sector-specific opportunities. RSI levels for the companies are generally in the mid-50s to low-60s, suggesting positive momentum without being overly extended.

Key Risks and Challenges

Despite strong growth prospects, several risks require attention. Volatility in key raw material prices, including copper and aluminum, poses a persistent threat to profit margins. Recent trends show moderate increases of about 5% for copper and 3% for aluminum in the past month, which could pressure margins if not effectively hedged. For R R Kabel, significant reliance on exports, particularly from the Middle East (12% of revenue), exposes it to short-term international economic fluctuations and currency risks. KEI Industries faces strong competition from established domestic manufacturers in the U.S. market for data center cables. Furthermore, the high P/E multiples across these companies suggest that much of their future growth is already factored into current stock prices. Any slowdown in data center demand, reduced government capital expenditure, or increased competitive intensity could lead to stock price corrections. While data center demand is robust, its sustainability beyond the current build-out phase needs ongoing monitoring. Competitors like Havells India offer diversified electrical product portfolios, and Sterlite Power focuses on transmission infrastructure, presenting different competitive dynamics.

Growth Prospects Remain Strong

Analyst sentiment for the sector is largely positive, with recent reports highlighting strong order pipelines driven by digitalization and renewable energy projects. Several reports have revised target prices upwards for Polycab and KEI Industries, citing their strategic positioning and execution capabilities, generally maintaining 'Buy' ratings with modest upside potential. RR Kabel's outlook is also positive, though some analysts note caution regarding its export concentration. Companies project continued growth; Polycab aims for 1.5x to 2x market growth, RR Kabel targets 16-18% volume growth, and KEI Industries anticipates up to 20% volume growth in FY28. These projections are supported by ongoing capacity expansions and new demand sources.