India’s Cable & Wire Sector Set For Faster Revenue Growth Despite Rising Input Costs: Crisil Ratings

New Delhi, Jun 3 (KNN) India's cable and wire (C&W) sector is poised for accelerated revenue growth this fiscal, even as manufacturers brace for sharper raw material cost increases driven by tightening global supplies amid the West Asia conflict, according to Crisil Ratings.

The ratings agency’s analysis of 17 C&W manufacturers — representing approximately 70 per cent of the organised sector's Rs 1 lakh crore revenue — points to a resilient outlook underpinned by strong infrastructure demand and healthy pricing flexibility.

Strong Track Record, Healthy Demand Ahead

Volumes in the C&W sector have grown at a compound annual growth rate of over 15 per cent over the past five years, driven by rapid digitalisation, growing urbanisation, and rising power demand. 

Mohit Makhija, Senior Director, Crisil Ratings, said, “This fiscal too, volumes will continue to grow on the back of demand for housing wires and power cables (~50 per cent of total revenue) with investments up to Rs 10-12 lakh crore lined up in renewables, power, real-estate and new age sectors like data centres and smart meters.” 

“However, volume growth is expected to be a tad lower this fiscal at ~10 per cent as higher prices (18-20 per cent rise in realizations) may lead to some deferment of discretionary capex spends by industrial sector,” he added.

Raw Material Pressures Mount

Crisil highlighted that copper and aluminium prices have risen 22–27 per cent, while polyvinyl chloride (PVC) — another key input — has increased by approximately 12 per cent over the last fiscal. The primary driver is tightening global supply, compounded by the ongoing West Asia conflict. Despite this, manufacturers are expected to pass on a significant share of cost increases to customers. 

Cables and wires typically account for less than 5 per cent of total project costs, affording companies considerable pricing power. That said, the entry of new players is intensifying competition, which will make price hikes more calibrated than in previous cycles. Nevertheless, absolute operating profits are still expected to expand by 12–13 per cent this fiscal, the ratings agency noted.

Capacity Expansion on the Cards

Rucha Narkar, Associate Director, Crisil Ratings, said, “Healthy cash flows and steady demand will encourage players to ramp up capex as utilization levels already touched ~75 per cent last fiscal. Overall, capacities are expected to go up gradually by 20–22 per cent by the end of fiscal 2027, of which nearly half will be added by new players.” 

“Majority of the funding will be through internal accruals and equity including for new entrants, having strong financial flexibility, thereby, keeping balance sheets strong and credit profiles stable,” Narkar noted.

Financial Health Remains Intact

Higher raw material prices are expected to increase working capital requirements, which will largely be met through channel financing and existing credit limits. 

Key financial ratios are projected to remain comfortable — debt to earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to hold steady at 0.5–0.6 times, while interest coverage is forecast at 16–17 times, both reflecting the sector's strong cash generation capacity.

Risks to Monitor

Crisil flagged two key risks warranting close attention: increasing competitive intensity from new market entrants, and any slowdown in capital investments across end-user sectors such as power, renewables, and real estate, which could temper the sector's growth momentum.

(KNN Bureau)