UltraTech Cement, India’s leading cement manufacturer, announced plans to venture into the wires and cables segment with an investment of ₹1,800 crore over the next two years. This strategic move aims to enhance its presence in the construction industry by leveraging existing relationships with end customers.
According to the company’s press release, the cables and wires market has experienced robust growth, achieving a 13% compound annual growth rate (CAGR) from FY19 to FY24. UltraTech intends to capitalize on the ongoing shift from unorganised to organised players in this sector.
The new manufacturing plant is set to be established in Bharuch, Gujarat, with an expected commissioning date of December 2026. However, the announcement had immediate repercussions in the stock market, with listed companies in the cables and wires space witnessing declines ranging from 8% to 20% over two trading sessions.
In total, this ₹1,800-crore capital expenditure plan resulted in a staggering loss of nearly ₹31,000 crore in market value for these companies. Analysts attribute this sharp reaction to several factors, including overall market weakness, high sector valuations, and lessons learned from previous experiences in related industries like paints. Currently, wire stocks are trading at an average of 30 times one-year forward earnings, despite a significant correction of 21% over the past year.
