UltraTech Cement has announced its entry into the cables and wires (C&W) segment with an ₹18 billion investment over the next two years, aiming to strengthen its position as a comprehensive ‘Building Solutions’ provider. As part of this strategy, the company plans to set up a manufacturing plant in Bharuch, Gujarat, with a capacity of 3.5–4 million km, scheduled for commissioning by December 2026.
The management is optimistic about the segment’s long-term profitability, targeting a Return on Capital Employed (RoCE) of over 20%, Internal Rate of Return (IRR) of around 25%, and an asset turnover of 5–7x by FY31. The C&W industry, valued at approximately ₹1 trillion, has grown at a 13% CAGR over FY19–24 and is expected to maintain this growth momentum over the next five years. UTCEM sees an opportunity for a new player in the market, even as existing competitors expand capacity.
UltraTech aims to leverage its extensive manufacturing expertise, strong distribution network, and established customer relationships to capture market share. The company does not expect significant pricing pressure from existing players and believes that its strong brand positioning and industry reach will support its foray into this segment.
Despite this diversification, UTCEM reiterated its commitment to its core cement business, where it remains an industry leader with a pan-India presence. The company expects to end FY25 with a domestic cement capacity of 182.8 MnT (accounting for 28% of the industry) and reach 209.3 MnT by FY27 with operations across 82 locations.
Management does not foresee any major additional capex requirements for C&W beyond the initial ₹18 billion investment and does not plan to enter any other building material segment in the near future.
According to Nuvama, investors will closely monitor UltraTech’s profitability and capital allocation in the C&W business, particularly in achieving its stated growth targets and margin expectations. The brokerage retains a ‘Hold’ rating on the stock with a target price of ₹11,574, emphasizing that while the expansion diversifies UltraTech’s revenue streams, its cement business will continue to be the key driver of growth.
(Inputs from Nuvama Institutional Equities)
