Polycab - India’s leading manufacturer of cables and wires.

A Deep Dive Into Business Model, Sector Dynamics, Financial Performance, Risks, and Management Outlook

Polycab - India’s leading manufacturer of cables and wires

Polycab is essentially the backbone of India's electrical infrastructure—from residential homes to massive industrial projects. The company makes money by manufacturing and selling three main product types and services.

Wires & Cables (W&C) – 84% of Revenue

This is Polycab's flagship business. They manufacture two types:

Wires are the thin electrical conductors used in homes. When an electrician wires your house, they're using wires like Polycab's. These range from simple single-core wires for small applications to flexible, fire-resistant wires for commercial buildings. Polycab offers over 11,000 varieties because different applications require different specifications—a wire for a residential apartment isn't the same as one for a power transmission tower.

Cables are thicker, more robust versions used in industrial settings, power distribution, telecommunications, and infrastructure projects. They can carry much higher voltages and are designed for specialised applications such as submarine cables, defence equipment, and oil & gas facilities.

Revenue drivers in W&C:

• Volume growth: In FY25, volumes grew 18-20% year over year.

• Pricing power: The ability to charge more without losing customers. Polycab adjusts prices based on raw material costs (copper and aluminium fluctuate significantly). When copper prices rise, they pass some of this cost to customers, and when prices fall, they can improve margins.

• Premiumization: Launching new, higher-quality products at premium prices. For example, their latest "Etira," "Primma," and "Suprema" wire ranges, which together account for 47% of total wire sales, command higher prices than basic wires.

FMEG – 11% of Revenue

FMEG stands for "Fast-Moving Electrical Goods." Think of this as Polycab diversifying beyond just wires. They've entered the consumer appliance space:

• Fans: Ceiling fans, table fans, exhaust fans for homes and commercial spaces

• Lighting: LED bulbs, tubes, luminaires (fancy term for light fixtures)

• Switches & Switchgears: The switches you flip on your wall, plus industrial-grade circuit breakers

• Solar products: Solar panels and inverters (devices that convert solar DC power to household AC power)

• Electrical conduits: Pipes to protect wires inside walls

The FMEG segment is growing faster than W&C—growing 29-30% year-over-year—because the Indian market is still in growth mode for these consumer products. Plus, this segment was unprofitable for years (actually losing money), but in FY25 it turned profitable for the first time, growing from -0.7% EBIT margin to positive profitability.

EPC – 5% of Revenue

EPC stands for "Engineering, Procurement, and Construction." This is a project-based business. For example, when the government launches a distribution sector modernisation scheme, Polycab wins contracts to supply massive quantities of cables and sometimes handles installation. In FY25, EPC grew by 144% due to government projects such as the Revamped Distribution Sector Scheme (RDSS). However, these projects have lower profit margins (7-9% EBIT) because they're highly competitive and margin-heavy.

How Diversified is the Customer Base?

B2B Customers (70% of revenue)

These are businesses, not individual consumers:

• Electrical contractors and installation companies: They buy wires to install in buildings (residential, commercial, industrial)

• Real estate developers: Buying in bulk for large housing projects

• Power utilities and government agencies: Infrastructure projects like grid modernisation

• Industrial companies: Manufacturing plants, oil & gas facilities, data centres, telecommunications companies

• Automotive and aircraft manufacturers: Specialised wires for vehicles

• Large infrastructure projects: Roads, railways, airports

B2C Customers (30% of revenue)

These are individual consumers and small businesses:

• Homeowners buying wires for renovation

• Small retail shops are buying LED lights and fans

• Electricians buying supplies

Customer Concentration: Very Diversified

This is crucial—no single customer accounts for more than 5% of Polycab's revenue. This means that if one big contractor stops buying, Polycab won't be devastated. The customer base spans different sectors (power, infrastructure, real estate, automotive, telecom) and geographies, making the business resilient.

Competitive Positioning: Why Polycab Wins

Moat 1: Scale & Distribution Network

Polycab controls 26-27% of the organized wires and cables market in India—nearly double their closest competitor. They have:

• 27 manufacturing plants (competitors have 3-5)

• 4,300 authorised distributors

• 2,00,000 retail outlets

• Presence in all major regions of India

Moat 2: Brand Equity and Customer Loyalty

Polycab has built an exceptional brand over the decades. Electricians recommend Polycab to customers because it's reliable and has good after-sales service.

The company has invested heavily in this:

• Sponsoring industry events and trade shows

• The "Experts App" for electricians and retailers offering loyalty rewards (over 2 lakh electricians are registered)

• WhatsApp chatbots for customer service

• Field teams engaging with electricians at the grassroots level

Switching costs are high: If you're an electrician with years of experience using Polycab wires, you know they're reliable. Switching to a new, unknown brand has risk—what if it fails? This customer lock-in creates pricing power.

Moat 3: Backward Integration

Polycab manufactures critical raw materials in-house:

• Copper wire rods (through a 50-50 joint venture called Ryker Plant)

• PVC and XLPE insulation compounds

• Aluminium rods and strips

Competitors who source these materials externally pay higher prices and have less control.

Moat 4: Innovation & Product Range

Polycab invests 2.5% of revenue (~₹550 crores) in R&D. They have research labs accredited by NABL (National Accreditation Board for Testing and Calibration Laboratories). They've developed:

• Green cables with sustainable materials

• Fire-survival cables for defence

• Specialised telecom cables

• Innovative wires for electric vehicles

This innovation keeps them ahead of competitors and justifies premium pricing.

Key Demand Drivers: Why This Sector Is Growing So Fast

1. Explosive Electricity Demand Growth

India's Projected Electricity Demand Growth by Sector (2024-2030)

India's total electricity demand is projected to rise from approximately 1,450 TWh in 2024 to 2,100 TWh by 2030, representing a ~6% CAGR. This is being driven by:

• Industrial sector (40% of demand, growing fastest): India is aggressively pursuing domestic manufacturing as part of its "Make in India" initiative. Steel production is targeting 300+ MT by 2030 (up from 150 MT today), textile manufacturing is expanding, and the automotive sector is electrifying. Each factory, mill, and manufacturing facility requires extensive wiring and cable infrastructure.

• Residential sector (27-29% of demand): Urbanisation is accelerating—India's urban population is projected to reach 600 million by 2036 (from ~500 million today). Air conditioning penetration is soaring; the residential AC stock is expected to reach 240 million units by 2030 (from ~100 million today), each requiring specialised wiring. Plus, with rising incomes, first-time access to electricity in rural areas is expanding.

• Services/Commercial sector (18-19% of demand): Metro rail expansion, smart cities, data centres, IT parks, and retail are driving demand for commercial building wires and speciality cables.

• Agricultural sector (10-15% of demand, declining share): Electrified agricultural pumps and irrigation systems continue to demand wires and cables.

The bottom line: Higher electricity demand = more wires and cables needed at every stage (power generation, transmission, distribution, final consumption).

2. Renewable Energy Boom: A Cable Bonanza

India's Renewable Energy Capacity Expansion (2024-2030)

India has committed to reaching 500 GW of non-fossil fuel electricity capacity by 2030 under its Nationally Determined Contributions (NDC). Here's the opportunity for cable makers:

• Solar capacity is expected to explode from 110.9 GW (June 2025) to 450+ GW by 2030—a 40%+ CAGR. Each MW of solar requires cabling for:

  • DC connections from panels to inverters

  • AC connections from inverters to the grid

  • Sub-station infrastructure and step-up transformers

  • Cables to remote solar plants across deserts and wastelands

• Wind capacity is projected to reach 150 GW by 2030, each requiring high-voltage cables connecting wind turbines to central grids.

• Grid modernisation: The government is spending ₹2.2 lakh crore to upgrade transmission infrastructure to handle renewable integration. This includes the Green Energy Corridor Project—building new transmission lines specifically to carry power from solar farms in Gujarat, Rajasthan, and Himachal Pradesh to demand centres in the south and east. Every kilometre of new transmission requires specialised high-voltage cables.

• Energy storage: India is targeting 411.4 GWh by 2031-32, requiring cables for battery systems.

3. Digital Infrastructure: 5G and Fiberization

Only 33-40% of India's telecom towers are fibreised (connected to optical fibre cables), compared to 80-90% in developed countries such as the US, China, and South Korea. The government targets 70% fiberization by 2030.

• 5G rollout: Telecom operators are fiberising towers and laying optical fibre backbone, requiring tens of thousands of kilometres of optical fibre cables annually.

• BharatNet Phase 3: The government aims to connect 2.7 lakh villages with optical fibre by 2030—laying cable at 1,251 km/day (compared to the current 350 km/day). This massive infrastructure project is explicitly creating demand for cables.​

• Data centres: India's data centre footprint is exploding due to cloud computing, AI, and digital payments. Each data centre campus requires thousands of kilometres of internal cabling and fibre connectivity to the grid.

  
  

4. Metro Rail and Urban Infrastructure

Metro rail networks are expanding in 20+ Indian cities. Each metro requires fire-retardant, low-smoke, zero-halogen (LSZH) cables—speciality cables that cost 2- 3x those of regular cables but are mandatory for safety. Metro projects in Mumbai, Delhi, Bengaluru, and Pune represent multi-year cable demand pipelines.

5. Government Policy Support

• Revamped Distribution Sector Scheme (RDSS): ₹3,037 billion allocation for modernising state electricity grids, requiring underground cabling and replacement of ageing infrastructure.

• PM Gati Shakti: Integrated infrastructure development plan requiring cables for integrated transport, power, and digital networks.

• National Broadband Mission 2.0: Target to extend OFC to 2.7 lakh villages by 2030.

• Production-Linked Incentive (PLI) scheme: Government subsidies for domestic cable manufacturing to reduce import dependence, encouraging investment.

Competitive Dynamics: Market Concentration and Barriers to Entry

Market Concentration: Moderately Concentrated

India Wires & Cables Market Share by Player (2025)

The market shows an interesting dynamic:

Player	Market Share	Dominance Level
Polycab	26-27%	Clear market leader—accounts for 1 in every four cables sold
Havells	10-12%	Second-largest organised player
KEI Industries	8-10%	Third-largest organised player
Finolex	8-10%	Strong regional player
RR Kabel	5-7%	Mid-tier player
APAR Industries	3-4%	Niche telecom cables focus
Other organized	5-7%	Smaller branded players
Unorganized sector	20-25%	Fragmented small/regional players

Barriers to Entry: Moderate to High

This is crucial for understanding Polycab's moat and why Adani/UltraTech's entry is a big deal:

1. Capital Intensity: Building a manufacturing facility requires ₹1,000-2,000 crores minimum. UltraTech invested ₹1,800 crores; KEI is investing ₹3,000+ crores for expansion. These are not small commitments.​

2. Distribution Network is Hard to Build: Polycab has 4,300 authorised dealers and reaches to 2,00,000 retail outlets. Building this network takes years and involves trust-building with small retailers. You can't simply rent this distribution—it needs to be built brick by brick.

3. Backward Integration is Expensive: Copper and aluminium account for 60-70% of cable costs. Polycab reduced costs by integrating—they control copper rod production through Ryker, PVC compound production, and aluminium supplies. New entrants either pay market prices (lower margins) or invest billions in backward integration themselves.

4. Technical Expertise and Standards: Cables must meet Indian Bureau of Standards (BIS) certification, international standards such as IEC for different voltage classes, and specialised certifications for applications (e.g., fire-rated cables for metros, LSZH cables, etc.). Building testing labs and obtaining certifications takes time.

5. Switching Costs Are Moderate: Electricians are familiar with brands. A contractor or distributor won't switch wires without a strong incentive (a lower price or a superior product). However, switching isn't as "sticky" as, say, software—price competition can overcome loyalty.

   
   

Degree of Pricing Power: Moderate to Low

This is the sector's critical weakness. While brand leaders like Polycab have some pricing power, it's constrained by:

• Commodity pass-through: Copper prices fluctuate significantly (currently ~$10,682/MT per LME), and 60-70% of COGS is raw materials. When copper falls, customers expect prices to fall. Polycab can't hold prices.​

• High competition: With an organised market still fragmented (Polycab's share is only 26%) and significant unorganised players, price competition is fierce, especially in commodity wires.

• Low differentiation among standard wires: A 2.5mm house wire from Polycab, Finolex, or Havells is largely commodity-like. Differentiation exists in speciality products (metro cables, telecom cables, solar cables), where margins are better but volumes are lower.

Competitive Dynamics: Number of Players and Concentration

The industry has nearly 400 players, ranging from small SMEs (₹50 crore in revenue) to large enterprises (₹400+ crore in revenue). However, the "real" competition is among the top 5-7 organised players because:​

• Small regional players compete on price but lack distribution for large projects.

• Unorganised players are losing share (market migrating from 50% unorganised a decade ago to 22-25% today)

• Major customers (utilities, large contractors, metro authorities) prefer dealing with branded, organised players they can trust

Competitive Tactics:

• Price competition on commodity wires: Finolex and RR Kabel compete aggressively on price, capturing cost-conscious segments.

• Premium differentiation: Havells and Polycab emphasise safety, durability, and brand heritage

• Specialisation: APAR focuses on telecom cables; Polycab is diversifying into FMEG (fans, lights, switches)

  
  

Regulatory and Technological Trends Shaping the Industry

1. Mandatory BIS (Bureau of Indian Standards) Certification

As of May 2025, the government made BIS certification mandatory for all household and commercial electrical appliances under IS 302 (Part 1): 2024. While this applies primarily to appliances, it reflects a push toward quality standardisation. For cables, BIS certification has long been quasi-mandatory for branded players, creating a barrier against low-quality imports and unorganised producers.​

2. Anti-Dumping Actions Against Chinese Cables

In September 2025, India's Directorate General of Trade Remedies (DGTR) initiated an anti-dumping investigation into Chinese copper data cables, finding prima facie evidence of dumping. The DGTR is also investigating other products, such as cold-rolled electrical steel, with proposed duties of ₹223-415 per tonne (5-year duration). This protects the domestic industry from cheap Chinese imports, supporting pricing power for Indian manufacturers.​

3. Technology Shift: Speciality Cables Drive Value

• Fire-rated, low-smoke cables (LSZH) are required for metro rail, airports, and high-rise buildings. Margin: 15-20% (vs. 10-12% for commodity wires).

• Optical fibre cables: For telecom and data centres. Requires different manufacturing expertise; higher margin but lower volume.

• EV charging cables: As electric vehicle adoption picks up, charging infrastructure will require specialised high-current cables.

• Renewable energy cables: Solar and wind installations require XLPE-insulated, aluminium alloy conductor cables rated for outdoor harsh conditions—higher specs = better margins.

Polycab and other organised players are investing heavily in R&D (2.5% of revenue) to capture these higher-margin niches.​

4. Smart Grid and IoT Integration

India's RDSS and smart grid initiatives are moving toward real-time monitoring and control. This doesn't directly increase cable volume but creates demand for sensors, instrumentation cables, and control cables alongside traditional power cables.

Major Sector Risks: Understanding the Downside

1. Commodity Price Volatility (Copper & Aluminium)

Copper comprises ~40% of wires and aluminium ~10% of cables. Prices fluctuate based on:

• Global demand (China, US, Europe)

• Geopolitical tensions (conflicts disrupting supply)

• Speculative trading (London Metal Exchange prices swing 20-30% annually)

When copper prices spike, cable makers face two options: (a) absorb costs and compress margins, or (b) raise prices and risk losing volume. This volatility makes the business model unpredictable.

2. Consumer Price Sensitivity

In the residential segment, electricians and small contractors are highly price-sensitive. A 10% price rise leads to switching. This limits pricing power, especially for commodity products.

3. Interest Rate and FX Risk

• Rising interest rates: Higher working capital costs. Cables are produced first, sold on 60-90 day payment terms, creating inventory and receivables cycles. Higher interest rates increase financing costs.

• INR weakness: If the rupee weakens, imported raw materials cost more. While backward integration mitigates this, small players without integration feel the pain.

4. Overcapacity and New Entrants

The most significant risk is industry oversupply. We're now seeing UltraTech and Adani entering the market:

• UltraTech Cement: Announced ₹1,800 crore investment in Gujarat facility (commissioning Dec 2026). They already have access to copper and mineral resources via Hindalco (Aditya Birla Group's aluminium/copper arm). This creates a backwards-integrated competitor.

• Adani Enterprises (Praneetha Ecocables JV): Announced entry in March 2025 with greenfield plant. They have Kutch Copper as their supply arm, which provides a cost advantage.

Why this matters: These are not small players. Both have superior financial backing, existing distribution (through cement networks), and backward integration through metals companies. If they aggressively price, the entire sector could face margin compression.​

5. Agricultural Sector Weakness

If rainfall fails or agriculture contracts (due to climate stress), agricultural demand (10-15% of electricity demand) could drop, reducing cable demand.

6. Government Policy Changes

If the government reduces infrastructure spending or delays projects like RDSS or metro expansions, demand could weaken.

Forward-Looking Perspective: How the Sector Will Evolve (2025-2030)

3-5 Year Outlook: Structural Growth But Margin Pressure

1. Demand Side: Very Positive

• Electricity demand growing 6%+ annually means cable demand growth of 8-14% CAGR (some growth compounds with infrastructure utilisation)

• The renewable energy boom will create a 3-5 year super-cycle of high-voltage transmission cable demand

• Urbanisation and metro expansion will drive speciality cable demand

• 5G and BharatNet will sustain telecom cable demand

Polycab's positioning: With 26% market share and strong backward integration, Polycab is positioned to capture a disproportionate share of growth, especially in high-margin speciality cables (FMEG, EPC, telecom, renewable).

2. Supply Side: Increasingly Competitive

• Capacity expansions by KEI (₹3,000 crores), RR Kabel (₹1,050 crores), Apar Industries, plus the entry of UltraTech and Adani, will likely add 20-30% industry capacity by 2027-28

• This could lead to temporary overcapacity (mainly 2027-2028) before demand absorbs it.

• Margin compression likely: EBITDA margins of 14-15% for Polycab may compress to 12-13% during 2026-28 as competition intensifies and pricing power weakens

3. Consolidation Trend: Unorganized → Organized

The trend of consolidation toward branded, organised players will accelerate:

• Small, unorganised regional players will continue losing share to organised players

• Premium customers (utilities, metro authorities, large contractors) will increasingly demand BIS certification and brand assurance

• This "premiumization" favours Polycab, Havells, and other large organised players

4. Specialisation and Differentiation

Winners will differentiate via:

• R&D and innovation: LSZH cables, EV charging cables, offshore wind cables (required for growing offshore wind projects)

• Backward integration: Controlling raw material costs (copper, aluminium, PVC compounds)

• Distribution and customer relationships: Building moats through deep dealer networks and electrician loyalty

• FMEG expansion: Moving up the value chain from pure commodity wires to fans, lighting, switchgear (higher margin, better stickiness)

Polycab's strategy: Heavy investment in FMEG (growing 30%+ YoY), R&D, and backward integration positions them well.

Polycab India: Earnings Calls Summary & Analysis (Q2 FY26)

Q2 FY26 (October 17, 2025) - "Caution Mode "While reporting strong numbers (₹64.8B revenue, +18% YoY), management explicitly acknowledged that the margin beat (15.8%) was due to non-recurring EPC gains (₹330 million) and favourable mix, not structural improvements. Reaffirmed 11-13% EBITDA long-term guidance. Noted inventory buildup (97 days vs. historical 80) as anticipatory for Q3 demand.

H1 FY26 Performance Summary Record half-year: Revenue ₹123.8B (+21% YoY), EBITDA ₹18.8B (+55% YoY), PAT ₹12.9B (+53% YoY), EBITDA margin 15.2%. However, sequential growth decelerated from 26% (Q1) to 18% (Q2), signalling momentum loss.

Recurring Themes & Management Priorities

Theme	Trend	Management Posture
Revenue Growth	Slowing (26% → 18% YoY)	Emphasising guidance 1.5x market growth; not acknowledging October power demand -6% decline.
EBITDA Margins	Beating guidance (15.2% vs. 11-13%)	Attributing to one-offs & mix; explicitly saying guidance is more realistic long term.
FMEG Profitability	Volatile (0.5% margin vs. 8-10% target)	Emphasising "on track" but acknowledging the long-term nature of the journey
EPC Segment	Declining (-19% YoY)	Downplaying; project execution cycles cited; not core to strategy
Working Capital	Deteriorating (43 days → 97 days)	Describing it as "anticipatory inventory buildup", manageable via letters of credit
International	Growing (+24% → +25% YoY)	Bullish; targeting 10% of revenue by FY30
Market Competition	New entrants (Adani/UltraTech) announced	Notably absent from discussions; no defensive strategy shared

Three Critical Headwinds Are Emerging:

1. Demand Softness (October 2025 electricity generation fell 6% YoY—worst since COVID)

2. Growth Deceleration (Revenue growth fell from 26% in Q1 to 18% in Q2 FY26 in just two quarters)

3. Competitive Pressure Arriving (Adani and UltraTech commissioning cable plants by Dec 2026, likely triggering 200-300 bps margin compression)