Motilal Oswal sees strong growth for Cables & Wires; bets on Polycab, KEI

Motilal Oswal Financial Services is upbeat on the Indian Cables and Wires sector, as it expects strong demand momentum and the uptrend in commodity prices to drive robust revenue growth in H2FY26.

 

The brokerage has reiterated ‘Buy’ on Polycab India (target ₹9,110) and KEI Industries (target ₹4,960) and a ‘Neutral’ rating on Havells India (target ₹1,640) and R R Kabel (target ₹ 1,470).

 

“For our coverage cables and wires companies, we estimate revenue/Earnings before interest and tax (Ebit) compound annual growth rate (CAGR) of 17 per cent/16 per cent over FY26-28, as compared to 18 per cent/19 per cent recorded during FY24-26E. We estimate Ebit margins to expand 1.0 percentage points year-on-year (Y-o-Y) to 12.3 per cent in FY26 and to remain at these levels over FY27-28,” the brokerage noted. 

Sector to outgrow GDP as capex cycle strengthens

The Indian CAbles and Wires industry has grown at about 11 per cent CAGR over the past five years and reached roughly ₹90,000 crore in FY25. Growth accelerated to around 13 per cent over FY23–25, driven by real estate, renewables, infrastructure, and industrial capex.

 

The brokerage expects this momentum to sustain, projecting 13–14 per cent CAGR over FY25–30, which would double the market to about ₹1.9 trillion by FY30. The sector is expected to grow at 1.5–2.0 times real GDP in the near to medium term.

Exports rising

India has been a net exporter of cables and wires since FY20, with exports rising from ₹8,300 crore in FY20 to ₹19,800 crore in FY25 (CAGR of 19 per cent).

 

In H1FY26, Cables and Wires exports touched ₹11,800 crore, up about 30 per cent Y-o-Y, while net exports stood at ₹4,200 crore, up 38 per cent Y-o-Y, signalling solid traction in overseas markets. Key trends for Apr–Sep 2025:

 

During Apr-Sep’25, within key markets, Germany witnessed the highest growth (65 per cent), followed by the US (63 per cent) and the UAE (49 per cent). The Australian and UK markets grew 20 per cent and 14 per cent, respectively, while exports to Saudi Arabia declined 58 per cent Y-o-Y. The US accounted for 25 per cent of total exports in Apr-Sep’25, as compared to 20 per cent in Apr-Sep’24.  ALSO READ | Antique initiates coverage on Adani Power with Buy, sees earnings upcycle   Even after the US imposed additional tariffs from August 27, 2025, export performance diverged across players: KEI Industries and RR Kabel saw export revenues jump 159 per cent and 46 per cent Y-o-Y over Sep–Oct 2025, respectively, while Polycab’s exports fell 23 per cent Y-o-Y.

 

Globally, the Cables and Wires market is estimated at $300 billion, growing at about 10 per cent CAGR, with Indian manufacturers benefitting from better product quality, wider SKUs, more global certifications, China+1 sourcing, and competitive costs.

Data centre capex a structural demand tailwind

The report highlights data centres as a powerful, long-duration driver for cable demand. India’s data centre market, currently around $10 billion, is projected to grow at 26 per cent CAGR over the next five years, backed by rapid digitalisation and cloud adoption, rising AI workloads, favourable regulations and policy support 

 

Major players (hyperscalers and colocation providers) have committed over $50 billion in investments for data center expansion over the next 5-7 years. As data centers grow, they become substantial consumers of cables:

 

Cables typically account for 5-10 per cent of a project's capital expenditure. Every 1 megawatt (MW) of new data center capacity generates about ₹3.5 crore in cable demand.

 

This trend creates a strong, structural growth opportunity for cable manufacturers, particularly those specialising in premium institutional cabling, the brokerage noted.  ALSO READ | Boost your portfolio with these 15 govt-backed high dividend yield stocks

Commodity uptrend lifts revenue, margins largely protected

Copper and aluminium—key raw materials for cables—have been on an uptrend since May 2025:

 

Average copper/aluminium prices have surged 10 per cent/8 per cent year-to-date (Y-T-D) and 14 per cent/11 per cent since Q3FY26. Copper prices are expected to remain elevated given the ongoing demand-supply dynamics. 

 

The brokerage continues to believe that a consistent raw material price increase will drive overall revenue growth, as companies have passed on higher costs by revising prices frequently for retail customers and through price variation clause for large orders.

 

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