The Indian wire and cable industry recently experienced turmoil following UltraTech Cement’s announcement regarding its entry into the sector. First, dominant market players saw a dent in their stock prices. Currently, UltraTech is facing significant competition, leading to some equities recovering.

UltraTech Strategic Diversification

On the 25th February 2025, Bharuch: one of the primary cement manufacturers across India UltraTech Cement and part of Aditya Birla group, has put forth a plan to develop a wires and cables production facility with an investment of almost $206 million. The initial construction in this facility is expected to be completed by December 2026. This is in line with UltraTech’s strategy to fortified its building value portfolio, furthering UltraTech’s waterproofing materials, TMT steel bars, plywood, sanitary ware, hand tools, and electricals.

As we have moved into the cable and wires business, we aim to broaden our operations in the value construction value register,” said birla. Kumar Mangalam Birla, deputed chairman of Aditya Birla group supplemented the comment by stating the wires and cable business complements UltraTech’s goal to offer full benefit of carrying out construction to their customers.

What the market thinks

Investors were quite clear about their negative response to the announcement, due to the concern of growth of competition in the wires and cables space. This has lead to the share prices of major corporations within this industry plummeting on the 27th February 2025.

KEI Industries as an example decreased their stock price by 21% to close at ₹2,989.

R R Kabel is down 20% now sitting at ₹892.

Polycab Ltd went down to 4,677 from 19% .

Finolex Cables fell by 6%.

The value Havells India has dropped by 7%.

There were negative anticipations as the new competitor was thought to change the game with a lot of money and an already set infrastructure in place.

Focused view of the analysts

Industry experts give the overview of potential outcomes of UltraTech’s expansion:

“UltraTech’s move into the cables and wires (C&W) category should help improve competition within the industry. Their aggression towards market entry will surely hurt profitability of the wires and cables business,” said Arun Agarwal, the Vice President of Fundamental Research at Kotak Securities.

“Unlike the paint industry which has a few brand names and significant barriers to entry, the cables and wires industry is bare without a top dog and is made up of a lot of regional brands,” highlighted Divyam Mour, a Research Analyst at Samco Securities. This makes it increasingly hostile to new entrants.

Stability in the market and increase in stock prices

The market did not remain quiet after the first round of investments, and it stayed strong. These considerations helped to explain why UltraTech’s impact was seen, considering the time needed for the new facility to be functional alongside what market share the established businesses hold. This reevaluation made shares in leading companies in the wire and cable sector primary investment interest.

UltraTech’s expected market share post plant commissioning in December of 2026, as anticipated by analysts, would be very low. Manish Valecha, a research analyst with Anand Rathi Institutional Equities has stated that the industry, as it stands, generates revenue of ₹1.8 lakh crore. UltraTech is set to invest ₹1,800 crore, meaning their first year revenues would stand at ₹6,500 to 7,000 crore which translates to 3 to 4% of market share. They will capture this from both organized and unorganized sectors.

Performance of the Share Price of Ultratech

UltraTech Cement’s own shares saw interesting movement as they dropped by nearly 5% following that announcement. Such a decline shows that shareholders are worried with how the capital is being spent by the business and whether they are moving far away from their primary competence which is cement. Investors have been cautious about this new direction because they do not see the core rationale behind such a significant expenditure, as well as its risks.

Final Thoughts

UltraTech Cement’s entrance to the wires and cables industry sustains their ambition of achieving a one stop shop for construction materials. Although that news made waves, most of them negative, resulting in huge sell offs and drops in very deep stock prices of remaining participants, with a more profound look at the competitive environment and UltraTech’s operational readiness timeline, the stock prices have seen a return and stabilization.

The episode highlights how important it is to think critically about how a market is likely to respond to change as well as how an investment will be executed and why.

If you are interested for more: Wire and Cable Stocks Rebound Strongly After Initial Jitters Over UltraTech’s Entry Up2 Minutes News – Keeping You Informed, One Minute at a Time.