For investors in UltraTech Cement Ltd, the wait is over.
In February 2025, the company had announced its decision to enter the wires and cables industry. On Thursday after market hours, it announced the launch of the business under the brand Ultravolt.
What stands out, however, is that the company’s plans seem more aggressive than initially foreseen. Backed by an investment of ₹1,800 crore, Ultravolt will be the second largest player in the wires segment by capacity, said UltraTech. Further, it aims to become one of the top two players within five years.
“Its ambition of becoming the No. 2 player within five years suggests that Ultravolt is likely to adopt an aggressive strategy for capacity ramp-up, distribution expansion and brand building, similar to the group’s approach during initial years of its paint business,” said analysts from Motilal Oswal Financial Services in a report on 3 September.
UltraTech is looking at a rollout across over 500 districts and 6,000 pin codes to start with. It plans to reach over 100,000 retailers and further activate availability through 5,000-plus UltraTech Building Solutions outlets.
As such, the near-term impact of the launch on UltraTech’s earnings would not be meaningful. Assuming 4-5x asset turns (about ₹10,000 crore revenue by FY30/FY31 estimates) and 10-12% Ebitda margins, the business could contribute about 3-7% of UltraTech’s FY30 estimated revenue/Ebitda, reckons Jefferies India. Ebitda is earnings before interest, taxes, depreciation and amortization—a key profitability measure for companies.
Stepping up the competition
UltraTech’s launch also means intensifying competition for other wires and cables companies. Investors are jittery. Shares of KEI Industries, RR Kabel and Polycab India plummeted 5-8% in Friday’s early session, while UltraTech’s stock was marginally up, by 0.5%.
To be sure, the near-term earnings growth of wires and cables companies would be supported by the sharp increase in copper prices. But growth could taper off after a few months from here, as the base becomes high due to elevated copper prices. Moreover, volume growth could be a sore spot. Polycab and KEI saw muted volume growth in the past two quarters, while RR Kabel did well; its volume growth was aided by a favourable base to some extent.
“Going into Q2FY27 as well, it is very likely that volume growth performance remains similar sequentially (copper +35–40% year-on-year),” said JM Financial Institutional Securities’ report dated 1 September. They added, “With elevated copper prices likely to be in the base starting late-Q3/Q4FY27, revenue growth (volume + value) could look meaningfully weak over the next 12 months.”
Meanwhile, UltraTech could benefit to some extent from a better demand environment in Q2FY27, even though the September quarter is seasonally weak, and cement prices have been muted. However, the sharp increase in operating costs, triggered by the West Asia war, could weigh on profit margins—a key metric investors should track when Q2 results are announced.
UltraTech’s Q1 Ebitda per tonne had increased by 1.4% on-year to ₹1,214, but fell 3% sequentially.