Adani, Birla Bet on Cables Sector Amid Growing Consolidation Wave

• Adani and Birla's entry into the $9B cables sector signals major consolidation, with acquisitions expected for faster scaling
• The industry may grow at 10-13% CAGR, driven by power, housing, and infrastructure, doubling in 6-7 years
• Rising competition could cut margins by 200 basis points, challenging existing players' profitability

India’s wires and cables industry, valued at over 9 billion dollars, is entering a transformative phase as conglomerates Aditya Birla Group and Adani Group announce their foray into the segment. Industry leaders expect a wave of consolidation, with acquisitions likely to be the fastest route to scale, given the massive investments already planned by the new entrants.

“Companies have announced such huge investments, so it cannot be only greenfield, because that will take a lot of time,” said Sunil Chordia, Managing Director of Rajratan Global Wire. “Consolidation is the answer for the long term, so some smaller companies will have an opportunity to cash out.”

The sector has the potential to grow at 10-13 percent CAGR and will likely become two-fold in the next 6-7 years with an increasing demand due to power, housing, and infrastructure. Experts however warn that an increase in competition may affect the profitability with an estimated 200 basis points margin loss that is due to be experienced by present firms.

“In India, power will be a key driver for the demand of wires and cables,” said Manjit Singh, chief executive for cables at KEC Asian Cables, a subsidiary of KEC International. “In other countries, we see replacement demand, but because India is a developing country, more than half the demand can come from the power segment alone.”

As the competitive intensity rises, the market mirrors trends seen in the cement and paints industries, where similar entries by large players led to rapid market consolidation and disruption.