FMEG Industry: Wire and cable stocks offer a huge opportunity; should you invest?
Pradhan Mantri Suryodaya Yojana’ in January 2024 for the installation of rooftop solar for 1 crore (10 million) homes should provide an incremental boost to wire makers. Energised by India's robust economic growth, the wires and cable industry (40-45% of the electrical sector market) has witnessed a massive surge over the last few years. Major players have experienced significant topline and profitability gains.
The Indian government’s ongoing focus on housing and infrastructure development should continue to drive structural demand for the wires and cables industry. In fact, continuation of these policies post the general elections in 2024 will only reinforce the sector’s strength. The government aims to have large-scale electronics manufacturing in India with Rs.1.97 lakh crore allocated under the PLI scheme.
Various initiatives have been launched by the government to boost digital infrastructure such as Digital India and Bharatnet, leading to higher demand for internet connectivity that bodes well for the industry. The industry is on a capacity expansion spree. KEI plans to spend around Rs.1,000 crore in the next three years.
Finolex Cables has guided capex to be around Rs. 300 crore for the next 18-20 months. Havells has planned an investment of about Rs.
600 crore for the development of a cable manufacturing unit.
Also Read: DCG Cables & Wires Ltd IPO: Issue booked over 5x so far on Day 3 led by retail investors, NIIs ; check GMP The Indian wire and cable industry majorly exports to the USA constituting approximately 18% of exports, followed by UAE (9%) and UK (9%). The Indian W&C market became net export positive for the first time in CY 2019 and has been export positive since then. W&C exports have grown by 23%
