After making a strong presence in the cement sector, Gautam Adani’s Adani Group and Kumar Mangalam Birla’s Aditya Birla Group are now set to enter the wires and cables segment. This move will bring these two industrial giants face-to-face in yet another competitive market.
In the copper and cement sectors, both groups have already been in a tough competition. Now, they are ready to challenge each other in the wires and cables segment, a sector with huge growth potential.
A Fast-Growing Industry
India’s wires and cables industry has seen a compound annual growth rate (CAGR) of 13% between FY2019 and FY2024. With the entry of these two large companies, the industry is expected to grow even faster. This development is likely to impact the stock market as well.
Since March 19th, the share prices of listed companies in the wires and cables segment have declined. On March 20th, the shares of Polycab India and KEI Industries reached their 52-week low. Similarly, Havells saw a 5% drop in share price, while Finolex Cables fell by 4% the next day.
An Ideal Segment for Big Investors
According to brokerage firm JM Financial, the wires and cables segment is an ideal industry for large capital investors. It noted that no single company holds more than 15% market share in wires and 20% in cables. This makes the industry competitive and open for growth.
Plenty of Growth Opportunities
India’s wires and cables industry consists of around 400 companies, with revenues ranging from ₹50 crore to ₹400 crore. According to global brokerage firm Jefferies, the cable and wire industry in India, valued at ₹80,000 crore (₹56,000 crore from cables and ₹24,000 crore from wires), has tremendous potential.
Jefferies’ analysts believe that the industry has many growth opportunities as it continues to grow at a double-digit rate. Currently, 30% of the industry is still unorganized, which presents a big opportunity for organized players.
By FY2028-29, the industry is expected to reach a value of ₹1,30,000 crore.
Conclusion
The entry of Adani Group and Aditya Birla Group into the wires and cables industry is expected to intensify competition and drive rapid growth. With the industry’s potential and increased investments, the wires and cables segment is set to flourish in the coming years.