Wired for Success: The Top Cable Stocks to Watch Out for 2024 and Beyond

The Indian electric wire and cables market is forecast to surge to US$ 2.2billion (bn) by 2027, growing at a CAGR of 4.6%.

Here's why you should be excited:

• India’s massive railway network, the third largest globally, is chugging forward. This expansion will need wires and cables, creating a golden opportunity for the sector.
• Renewable energy trend is picking pace in India (and the rest of the world) like a storm. Increasing focus on clean energy sources will fuel demand for efficient transmission and distribution, requiring top-notch wires and cables.
• Smart cities incorporating 5G, cloud computing, and the Internet of Things (IoT) will rely heavily on robust cable infrastructure. Think high-speed data travelling through advanced Optical Fiber Cables (OFC) - the backbone of smart cities.

Going by projections, this growth is expected to be twice as fast as India's overall GDP. That's some serious momentum.

Safe to say that the future looks bright for India's electric wire and cable market.

Are you ready to be a part of it?

Here are a few companies involved in the wires and cable market, thriving with the government's push for infrastructure development.

#1 Paramount Communication

Paramount Communications has been one of India's trusted wire and cable manufacturers for six decades. The company offers multiple products - power cables, optical fibre cables, railway cables, specialised cables, instrumentation and data cables, and fire survival cables.

With manufacturing units in Haryana and Rajasthan, the company offers connectivity solutions for power, telecom, IT, railways, industrial, and petrochemical sectors.

The company's consolidated net profit for the December 2023 quarter skyrocketed by an impressive 54%.

In January 2024, Paramount's stock price reached its all-time high, marking a phenomenal 700% increase in just five years.

And going by recent trends, the momentum isn't slowing down anytime soon - the stock price has surged an additional 22% in the last month alone.

This is mainly due to the company's announcement to issue up to 22,524,980 equity shares to select investors.

The company also has plans to acquire 100% of the stake in Valens Technologies.

As of September 2023, Paramount Communications has a robust and diverse order book valued at Rs 3.6 bn.

#2 RR Kabel

Incorporated in 1995 in Vadodara, RR Kabel is a subsidiary of Ram Ratna Wires. It is a part of the RR Global conglomerate with a global presence in 85 countries.

About 10% of the company's revenue comes from its wires and cables segments. The company also sells electrical goods like fans and lighting.

While the Indian electric wire and cable market is buzzing with potential, RR Kabel's latest results show a temporary setback.

The company's December 2023 quarterly results show a marginal fall in its net profit to Rs 709.6 million (m).

A 5% increase in raw material prices has caused a temporary expense increase of 12%.

The temporary dip in profits due to rising raw material costs is likely a short-term hurdle.

The good news is that RR Kabel is strategically positioned to benefit from the government's push for infrastructure, rural electrification, 5G rollout, and digitisation.

Customer demand for upgrades and replacements is expected to fuel this growth.

#3 KEI Industries

Founded in 1968, KEI Industries initially focused on rubber cables for house wiring. Now, the company produces high-demand cables such as EV, MV, LV, solar cables, and more.

KEI Industries has five manufacturing plants with a network of 1,900 dealers and distributors. The company exports its products to 60+ countries.

The company registered a 15.6% YoY revenue growth in the December 2023 quarter.

KEI Industries is gearing up for a major surge in exports thanks to its strategic capacity additions. This positions the company perfectly to capitalise on the booming global demand for wires and cables.

KEI Industries share price has delivered a staggering 232.8% return in just two years.

The company has consistently paid dividends to shareholders.

It expects revenue growth of 15-16% in the coming year.

Additionally, the company is investing heavily in expansion with a Rs 5 bn capex in 2024 and a planned Rs 6-7 bn next year for a new plant at Sanand, Ahmedabad.

#4 Ultracab India

Ultracab India was founded in Gujarat in 2007. The company uses modern technology and high-tech machines to produce a variety of cables like PVC/XLPE power and control cables, elevator cables, multi-core flexible cables, aerial bunched cables, etc.

Ultracab India's standalone net profit for the December 2023 quarter increased by 3.8%.

Also, in 2023, the company reported an 85% increase in its net profit while sales grew by 26%.

Ultracab India has landed major contracts in recent months. The company recently signed an agreement to supply low-tension (LT) cables to Tata Power Company.

This deal signifies industry recognition and opens doors for future collaborations.

Ultracab India also secured a hefty Rs 477.8 m order from Sterling & Wilson. This further strengthens its order book and fuels future growth prospects.

#5 Polycab India

Polycab India is the go-to company when it comes to wires and cables in India. Established in 1996 in Mumbai, the company has expanded its operations to 25 manufacturing facilities.

Apart from various wires and cables, the company also sells FMEG products like electric fans, LED lighting, switches, luminaries, etc.

Despite a challenging market, Polycab delivered a commendable 15.3% increase in its net profit to Rs 4.2bn for the December 2023 quarter.

Polycab's wires and cables division, its core business, is experiencing healthy volume growth.

With a whopping 66% promoter holding, Polycab's management team has shown skin in the game.

While the industry faces pricing pressure due to increased capacity, Polycab has sufficient production capabilities, currently operating at 70-75% utilisation. This allows them to adapt to market conditions and maintain profitability.

Polycab understands its key market - 70% of its demand comes from the real estate sector. This targeted approach positions them well to capitalise on the growth potential in this industry.

#6 Dynamic Cables

Dynamic Cables has been catering to the energy and power sector of the country for over 35 years. With a 250+ domestic client base and a 100+ overseas client base, the company exports to 40+ countries.

Dynamic Cables recently smashed its own record, achieving the highest-ever revenue for both the December 2023 quarter and the first nine months of FY24.

The company reported net sales of Rs 1.9 bn in December 2023, a 21.1% YoY growth.

A robust macroeconomic environment, supportive government initiatives, and increased spending from both private and public sectors create a strong demand for its products.

With growing urbanisation, increased government infrastructure spending, and a focus on capital expenditure, the company is well-positioned to capitalise on these long-term growth trends.

#7 Marco Cables

Started first in Maharashtra in 1989, Marco Cables has been a leader in manufacturing XLPE, PVC, and Aerial Bunched Cables.

The company has expanded to ACSR, AAC, and ABC cables for distribution and transmission power lines.

Marco Cables had a successful initial public offering (IPO) in September 2023, with its stock price listing at a 7.5% premium on the NSE SME exchange platform.

Even though it's a new player in the market, the company is showing signs of financial health with improving profit margins and a stronger capital structure.

#8 Plaza Wires

Plaza Wires entered the cable scene in 2006, and the company has quickly expanded to branch offices in 3 states and warehouses in 4 states. It also has 1,250 authorised dealers and distributors.

Plaza Wires' IPO in October 2023 was a scorching success! Their share price skyrocketed a staggering 55% premium on debut, even doubling the upper price band within a week.

The funds raised through the IPO is to be used for the strategic expansion of Plaza Wires' manufacturing capabilities. They're building a new facility to produce house wires, fire-resistant, aluminium, and solar cables.

The company reported net sales of Rs 500.1 m for the December 2023 quarter.

This expansion will allow them to capitalise on several high-growth segments within the market.

#9 Finolex Cables

Since 1958, Finolex Cables has been a well-known manufacturer of electrical and telecommunication cables. Apart from cables, the company also sells fans, water heaters, switchgear, lights, conduits, and fittings.

With four manufacturing plants, the company has become one of India's largest cable manufacturers.

Finolex Cables is pouring a whopping Rs 5.8 bn into expanding its footprint in Maharashtra. They're ramping up their optic fibre cable capacity to a staggering 8 million fibre kilometres per year.

This can help them capitalise on the booming demand for high-speed internet.

Finolex Cables is only the second company in India to manufacture glass performs - a vital component for optic fibre production.

Finolex Cables' investment is expected to generate 400 direct and indirect employment opportunities.

#10 V-Marc India

V-Marc India started its journey in 2006 as a partnership firm manufacturing and distributing PVC-insulated wires and cables.

The company has two manufacturing plants in Uttarakhand and it's a premium manufacturer of multi-core wires and cables with copper or aluminium conductors.

V-Marc India might be grabbing headlines for recent regulatory actions. SEBI barred the promoter of the company from the securities market.

However, V-Marc India is electrifying the market with a massive Rs 870 m order win from Purvanchal Vidyut Vitran Nigam Limited (PVVNL) and Dakshinanchal Vidyut Vitran Nigam Limited (DVVNL).

This significant order boost strengthens its revenue potential.

#11 Universal Cables

Universal Cables was known as Hindustan Woollen and Mills in 1961. Later, it was rebranded as Universal Cables as it expanded to manufacturing and selling cables, capacitors, and other products.

Universal Cables is undergoing a calculated business model shift. They're strategically upgrading their manufacturing facilities to stay at the forefront of technology.

While the competitive ecosystem and market volatility pose challenges, the updated product mix can increase operational revenue for Universal Cables.

They have ambitious expansion plans to scale up their production capacity across the board, encompassing EHV (Extra High Voltage), MV (Medium Voltage), and LV (Low Voltage) cables.

#12 Cords Cable

Established in 1987, the primary focus of Cords Cable is to meet the demands for high-quality customised cables. Headquartered in Delhi, the company has two state-of-the-art manufacturing plants in Rajasthan.

The standalone December 2023 net sales of Cords Cable jumped an impressive 29.8% YoY, reaching Rs 1.7 bn.

The company has had a good run in the stock market too. Its share price has skyrocketed, delivering a phenomenal 79% return in just six months and a whopping 93% return in the last one year.

Cords Cable isn't just growing - they're booked solid!

Their total order book as of January 2024 sits at a healthy Rs 1.8 bn, and they expect to fulfil these orders within the next 3-5 months.

While their current production capacity is 65,000 kilometres per annum, their commitment to modernisation and infrastructure upgrades suggests they're prepared to scale up even further.

Cords Cable has earned the trust of industry giants.

They're an approved vendor for RDSO (Research Designs & Standards Organization), a pre-qualified supplier with AAI (Airports Authority of India) and have approvals from Abu Dhabi National Oil Company and Samsung Engineering Co Ltd.

Snapshot of Top Cable Stocks on Equitymaster Stock Screener

Here's a table comparing the above companies on certain important parameters.

Please note that these parameters can be changed according to your needs. Check out our powerful screener for more such screens.

In Conclusion

The Indian electric wire and cable market is getting charged up!

India's commitment to clean energy is driving a massive shift. Solar and wind farms are popping up all over the country, and they all need one crucial thing - efficient and advanced wiring solutions!

The future is all about high-tech solutions. High Voltage Direct Current (HVDC) cables are becoming the go-to option for long-distance, high-voltage power transmission.

The trend isn't limited to India.

The European Commission is also investing heavily in cross-border infrastructure projects. This will further boost the demand for HVDC cables.

The industry faces some hurdles though.

Extra reliance on copper and aluminium exposes manufacturers to price fluctuations in raw materials. This impacts their cost structure and profitability.

Nevertheless, with the government's push for renewable energy and technological advancements, this sector is set for a bright future.

Keep an eye out for companies capitalising on these trends to uncover investment opportunities.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...