Aditya Birla’s next big bet: Can UltraTech shake up wires & cables like Grasim did with paints?

But unlike paints, where Grasim’s Birla Opus challenged incumbents like Asian Paints and Berger with deep discounts, UltraTech’s entry into wires and cables comes with distinct hurdles.

The market has been quick to react—UltraTech’s stock slid 5% on Thursday, following the announcement, while incumbent players like Polycab India, KEI Industries, and Havells fell 6% to 21% on fears of rising competition.

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“The proposed entry into this segment of the construction value chain, through its building products division, is in line with the company’s strategy to strengthen its position as a comprehensive building solutions provider," the company had said in a regulatory filing on Tuesday after market hours.

UltraTech's playbook for market share

A key question for investors is whether UltraTech will mirror Grasim’s aggressive pricing playbook. When Birla Opus entered the paints business, it priced 17% below competitors and offered longer credit periods to distributors—forcing rivals to react.

If UltraTech adopts a similar pricing strategy in wires and cables, analysts at ICICI Securities estimate it could grab a 5% market share by FY30. “If it gains market share of 5% by FY30, growth rates (CAGR) for incumbents may decline by 100–150bps over FY24–30E," according to an ICICI Securities report dated 26 February.

But unlike paints—an oligopoly dominated by a few giants—wires and cables is more fragmented, making rapid market-share gains harder.

Nuvama analysts noted that while cables and wires offer reasonable margins and return on capital employed, they fall short of the high margins seen in paints, making it harder for new entrants to disrupt pricing significantly.

Despite this, UltraTech’s strong pan-India brand recall could still give it an edge in pricing strategy, pointed out Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.

Another key difference is distribution.

In paints, Grasim leveraged the Birla Group’s existing dealer network built through its white cement and putty business. UltraTech, by contrast, will have to establish an entirely new distribution network for wires and cables, adding complexity to its expansion plans.

Despite these challenges, the company could still make inroads, particularly in the B2B segment and among smaller, unorganized players. The organized sector currently commands about 70% of the ₹82,000 crore industry, with wires accounting for 35% of the total market.

ICICI Securities has forecast an incremental market opportunity of ₹10,000 crore, and if UltraTech manages to gain a foothold, it could apply pricing pressure across the industry.

Industry concerns

While margin pressures remain a key concern, UltraTech’s strong cash flow and history of aggressive expansion suggest it could continue venturing into other building solutions segments, potentially intensifying competition across the industry.

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The wires and cables sector typically operates with an asset turnover of 4–5 times, an operating margin of 10–12%, and return ratios between 15% and 20%, as per analysts at JM Financial Institutional Securities. "Accordingly, on full ramp-up, this would imply potential Ebitda accretion of approximately 4-5% on FY27E Ebitda base," said the brokerage’s report dated 26 February.

“Ultratech's revenue potential from approximately ₹1,800 crore capex can be estimated in the range of Rs7,200-9,000 crore," Jefferies said.

The firm expects the competitive impact to vary across players—Polycab India, for instance, may be less affected since 65–70% of its revenue comes from B2B cables. In contrast, companies like Finolex and Havells, which have a larger share of their business in housing wires and B2C segments, may feel the heat more.

Industry observers believe UltraTech could benefit from the Birla Group’s well-established supply chain, distribution network, and strong brand presence. Additionally, Hindalco, a major copper and aluminum player within the group, could provide supply advantages, helping UltraTech strengthen its market position.

Capital allocation

The expansion, however, raises questions about UltraTech’s capital allocation strategy. While the investment in a non-cement business represents just 10% of its annual capex guidance, it has left some investors wary. The concern is that it could signal a shift in focus away from cement, creating uncertainty for those seeking pure-play exposure to the sector.

Motilal Oswal Financial Services pointed out that while earnings for existing cables and wires companies will remain unaffected until UltraTech’s plant is commissioned, valuation multiples could take a hit much earlier—unlike paints, where valuations held steady until Grasim’s plant became operational.

Additionally, while paint companies have historically commanded high valuation multiples, cables and wires firms have undergone multiple re-ratings in recent years, making them more vulnerable to competitive pressure.

“While there will be no change in earnings estimates for cables and wires companies over the next two years, there could be a de-rating in their valuation multiples due to the entry of a sizeable player," Motilal Oswal said in a 27 February report.

There are operational challenges as well.

Analysts note that approvals for supplying cables and wires to projects typically take six to nine months after products are ready. By contrast, paints could be sold directly through hardware stores, where Grasim had an established presence and long-standing relationships with key influencers such as painters. This difference could slow UltraTech’s initial growth trajectory in the segment.

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Despite these uncertainties, one thing is clear: UltraTech’s entry has altered the competitive landscape for India’s wires and cables sector. Whether it can replicate Grasim’s success in paints—or whether the challenges of a fragmented market and new distribution model prove tougher than anticipated—remains to be seen.