Wires on fire: Why UltraTech’s Rs 1,800 crore Ultravolt bet wiped out Rs 21,500 crore in 2 days
Polycab India suffered the biggest rupee erosion, losing Rs 8,766 crore in market capitalisation in two days. KEI Industries followed with a Rs 5,158 crore decline, while Havells India, RR Kabel, APAR Industries and Finolex Cables lost a combined Rs 7,501 crore.
The selloff reflects growing investor concern that UltraTech’s Rs 1,800-crore Ultravolt investment could intensify competition, pressure margins and force established cable makers to spend more on distribution, advertising and engaging electricians.
“Competition in the Indian C&W space is clearly intensifying,” JM Financial said in a report, adding that the possibility of a “sector-wide derating” could not be ruled out.
What changed after Ultravolt?
UltraTech began commercial production at its Jhagadia facility in Gujarat earlier than initially expected and launched Ultravolt under the Aditya Birla Group.
The company started with an installed capacity of about 1.1 million kilometres, focused on house wires and light-duty cables. Its initial portfolio includes home wires, flexible and submersible cables, solar cables, communication cables and select power and industrial cables.
UltraTech plans to distribute the products across more than 500 districts and 6,000 PIN codes, while targeting over 100,000 retailers. It is also leveraging more than 5,000 UltraTech Building Solutions outlets and has onboarded over 1,600 electricians ahead of the launch.The company aims to become one of the top two wire and cable players within five years. Its eventual capacity could rise to 3.5-4 million kilometres.
Nomura estimates that UltraTech could capture around 6%-7% of the organised wires and cables market by fiscal 2030, assuming strong industry demand and asset turnover of 5-6 times. That scale has forced investors to reassess the competitive landscape.
Why the market is worried
The immediate pressure point is the retail wire segment, where products are sold through dealers, distributors, retailers, contractors and electricians.
Ultravolt is entering this market with the brand strength and distribution infrastructure of the Aditya Birla Group. Its access to group-sourced copper, an established construction ecosystem and UltraTech’s nationwide distribution network could allow it to scale faster than a new entrant normally would.
Incred Research said Ultravolt should be viewed as a “credible long-term competitor rather than a small diversification experiment.”
The brokerage expects the impact to appear first through lower realisations and higher advertising and promotional spending, rather than an immediate decline in volumes.
Nomura also pointed to early signs of rising promotional intensity. Havells’ advertising and promotional spending had already increased to 4.4% of sales in the first quarter of fiscal 2027, compared with 2.7% in fiscal 2026, according to the report.
The concern is that cable makers may have to increase discounts and channel incentives to protect shelf space and electrician preference. That could weaken pricing discipline just as valuations remain elevated.
Polycab, KEI and RR Kabel take the biggest hit
Polycab’s market value declined by Rs 8,766 crore over the two sessions, with the stock falling nearly 7%. The company has the largest absolute exposure among the listed players to wires and lower-voltage cables, although its scale, distribution network and export opportunities provide some cushion.
KEI fell 10%, reducing its market value by Rs 5,158 crore. RR Kabel declined 8%, losing Rs 2,432 crore.
Havells, which fell 4%, saw Rs 3,088 crore wiped out. Nomura retained a Neutral rating on the company, saying its wires and cables business had been a key contributor to overall earnings growth and could now face pressure.
Finolex Cables declined nearly 3%, while APAR Industries fell 2%. Their market-value losses stood at Rs 509 crore and Rs 1,473 crore, respectively.
JM Financial’s valuation comparison showed that cable stocks were trading at premiums of about 4%-5% to their five-year averages and around 25% to their longer-term average price-to-earnings multiples. That leaves less room for any disappointment in growth or margins.
The reports caution against treating the wires and cables industry as a single business.
Ultravolt’s current portfolio extends up to 11 kilovolts. Its immediate overlap is therefore concentrated in house wires and light-duty cables, where entry barriers are relatively low and competition is driven by brand recall, dealer margins, electrician engagement and distribution reach.
Higher-voltage medium- and extra-high-voltage cables have a different competitive structure. These products require specialised production lines, testing infrastructure, type-testing certificates, prequalification and utility approvals.
Incred said the higher-voltage segment remains relatively insulated from the near-term competitive threat. It preferred Diamond Power Infrastructure because about 80% of its revenue is estimated to come from segments that Ultravolt cannot address in the medium term.
The brokerage retained an Add rating on Finolex Cables, while assigning Hold ratings to Polycab, KEI and RR Kabel. It maintained an Overweight stance on the broader sector.
KEI may also be relatively better protected because retail accounts for about half of its revenue, while its growth engine includes EHV and HT cables and exports. However, the company remains exposed to the broader sector-wide pressure on valuations and margins.
The selloff does not necessarily signal that the long-term wires and cables opportunity has disappeared.
Incred expects India’s cables and wires market to grow at roughly 12% annually through fiscal 2030, driven by transmission expansion, renewable-energy evacuation, underground cabling, data centres and electrification.
India’s data-centre capacity is expected to increase from 1.5 gigawatts to 6.5 gigawatts by fiscal 2030, creating an estimated Rs 175 billion opportunity for conventional and optical-fibre cables, according to the report.
But investors are now questioning how much of that growth will translate into earnings for incumbent companies.
JM Financial said UltraTech and Diamond Power could cumulatively command more than 12% market share by fiscal 2029. It also warned that even if market-share losses are moderated by the presence of unorganised players, margin risk could persist because of disrupted pricing discipline.
Disclosure: This article has been written by Nikhil Agarwal, who is not a SEBI-registered Research Analyst or an investment advisor. Nikhil Agarwal does not hold any financial interest in the company named in the article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.
