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Published: September 15, 2023
Updated: September 15, 2023

Boom time for wires & cables

With its all-pervasive presence in all sectors of the Indian economy, the domestic wire and cable market is projected to reach a humongous Rs. 1000 billion within the next decade. Apart from traditional drivers of the wire and cable segment like business and domestic consumers, the Indian government’s thrust on infrastructure development, a corresponding boom in private real estate development, and the specialized requirements of next-gen technology like IoT, e-automobiles and 5G telecom will be catalysts for an exponential growth of the segment.

Added to these thrust areas will be new product types like BMS cables, fire survival cables and home automation solutions, as also a spurt in demand for special segments like railway cables and solar cables. Corporate India Corporate India highlights five wire and cable company Corporate India stocks that are promising retail investment avenues.

The Rs 1,000 billion Indian wire and cable industry – the veritable backbone of the indispensable electrical and electronics sector — is on the fast track of growth. The reason is self-evident if one considers the analogy of blood vessels being the conduits for nutrition and energy to the human body. Similarly, wires and cables are the channels that transmit power and data that keep modern societies ticking. As far as India is concerned, the government’s initiatives to boost domestic manufacturing and infrastructure are revving up the growth of the wire and cable sector.

Not just that, the country’s shift towards renewable energy on the back of the government’s ambitious environment protection plans, complemented by the expansion of power transmission & distribution and increasing investments in real estate and transportation (roadways, metro, railways and airways), are other significant developments that bid fair to boost the wire and cable sector.

Describing wires and cables as a crucial sector driving the country’s economic growth, Bhushan Sawhney, Chief Business Officer (Cable) of Polycab, points out, “Due to rapid GDP and economic growth, India will experience a power surge soon. The number of units consumed per capita has increased significantly and is expected to grow as the present government invests heavily in infrastructure development, including modern public utility facilities (airports, railway stations, etc.). These investments will recirculate and India will soon see massive growth in private real estate and infrastructure construction. Several industrial corridors are being built and more industries will emerge as connectivity improves. Industries will be set up and residential projects for the working staff in these industries will begin, in addition to the construction of commercial complexes, small businesses, recreational facilities and other similar structures. All these new developments will significantly increase the demand for electrical goods. Apart from the huge demand for quantity, several new product types like BMS cables, fire survival cables and home automation solutions will be in high demand.”

TECH CATALYSTS

Notes one expert, “With technology becoming increasingly integrated, wires and cables are gaining more importance than ever before. The applications of wires and cables have increased due to growing data centres and IT facilities, ensuring secure and affordable connectivity. Moreover, the demand for next-gen gadgets and the rollout of 5G and 6G services are acting as catalysts for the ever-growing industry.”

Adds Ashish Mangal, Managing Director, Dynamic Cables, “Some of the major trends defining the growth of the wire and cable industry are the revamped distribution sector scheme (RDSS), the surge in EV charging products and accessories, and the rising export potential of the industry. Additionally, there will be a spurt in demand for special segments like railway cables and solar cables.”

According to Abhinandan Lodha, Director (Sales) of Chandresh Cables, “There is a growing number of infrastructural development projects like the expansion of the Metro and construction of airports. Notably, we expect to see a drastic rise in investments and spending from the government and the private sector. These factors are playing a crucial role in bringing growth opportunities in the wire and cable industry.”

BLAZING SPEED

Interestingly, the last 25 years are probably the fastest infrastructure-growth years in India and this holds good also for the wire and cable industry. Rapid urbanisation and industrial development have contributed to the exponential growth of the electrical cable industry in the country.

According to one study, the global wire and cable market is growing at a CAGR of 6.45 per cent and the global market for this industry is expected to reach $ 332.65 billion in the course of a decade. Interestingly, the Indian wire and cable market is growing at an even faster pace. With a whopping CAGR of 15 per cent, the rising Indian market reflects the rapid developments in the country’s power and infrastructure sectors. What is more, it is not going to slow down any time soon. With the advent of Industrial Revolution 4.0, global investors are eyeing the potential Indian market, with specific reference to high voltage (HV) and extra high voltage (EHV) cable product lines.

The genesis of the wire and cable industry is tied with the beginnings of the Industrial Revolution itself. It all started in the late 19th century when, in order to lay commercialized telegraph lines, the industry was born. The first product lines were iron wires with a thin copper coating. Ever since, it has been a long and innovative journey over the years. Starting with gutta-percha insulated cables, moving on to PVC insulation and now optical fibre cables, changing requirements, demands and technology implementations have shaped this industry dramatically.

INDIA PUSH

The Indian story is no different. It is not surprising that developing nations like India and many in the African continent are now pushing the gross demand for wires and cables. Though the commercial and industrial segments of the market are evenly growing all across the European, Asian and American regions, the domestic segment has made a huge difference in India and Africa.

The bottomline in the telecom sector and the Indian government-led PLI schemes are another factor responsible for upscaling in the manufacture of commercial grade electrical and high intensity cables. The wires and cables sector is a significant 40 per cent of the electrical industry in India, and will benefit greatly from advances in the power generation and distribution equipment sector.

Industries are now moving towards digitization and away from legacy systems. Be it manufacturing processes, products or machinery – all are getting the technology touch. This smart manufacturing or the industrial internet of things (IOI) is a reflection of the current Industrial Revolution 4.0.

NEW DIMENSIONS

While the first industrial revolution cleared the base for industries to come up, it was the second industrial revolution that created the demand for wires and cables for industrial use. There was further expansion with the third industrial revolution that saw the coming of age of computers and automation – a development that injected a whole new dimension to the wires and cables industry.

Production lines expanded to cater to specific segments which now comprise 72 per cent of the wires and cables market. These new-age requirements are for automobiles, domestic/commercial purpose machinery, PDA devices, etc. Henceforth, the fourth industrial revolution will further expand the innovative use of wires and cables inside IoT devices and the 5G network of the telecom sector.

As per IEA’s India Energy Outlook study of 2021, energy consumption in India is increasing exponentially and its future energy demand is pegged at almost a quarter of that of the entire world. Along with cement and steel, a significant rise in the production and sale of electricity equipment, including wires, cables, switches, motors, etc., is foreseen in the coming decade. Moreover, to preclude accidental electrical fires and similar mishaps, the demand for fireresistant, multi-layered and flexible domestic cables is now at an all-time high.

TECH DEMANDS

Today, the wire and cable industry is on the threshold of the fourth industrial revolution where industries will rapidly move towards digitization. Reflective of the coming revolution is smart manufacturing, or the industrial Internet of Things (IoT).

From a broad perspective, the new industrial revolution is bringing in two key changes in the cable industry. One is driven by technology adaptation while the other demand driver will come from brands investing in innovation and awareness campaigns.

Tomorrow, the need will be for products with futuristic technology which will require more sophisticated, safer and commercial industry grade wires and cables. These products will be required for specific- purpose devices and products.

With the widespread use of IoT devices and equipment, the domestic wires and cables market will soon see a different kind of demand.

Maintains an expert, “The wires and cables market in India has the potential to grow by $ 1.65 billion by 2025 and the market’s growth momentum with accelerate at a CAGR of 3.80 per cent. Investment in and development of infrastructure projects by the government will be a huge growth driver for the wire and cable market in India.”

HUGE NUMBERS

India is literally overflowing with wire and cable companies. If we take all the small, medium and large companies - in the organized as well as unorganized sectors -- the total number will reach 17,363 (as on August 11, 2023)! However, most of these companies are in the small and medium categories and also in the unorganized sector. As such, the number of listed companies does not exceed even 30. Of these, there are at least a dozen companies are worth investing in. We at Corporate India have picked five of these 'worth investing in' companies. Here goes the list. Happy investing!