India's cables and wires (C&W) industry is expected to deliver faster revenue growth this fiscal, driven by sharp price hikes to offset soaring raw material costs, even as volume growth moderates from the robust pace seen last year, according to a report by Crisil Ratings. 

The sector recorded volume-led growth of more than 20% in the previous fiscal. While volume expansion is expected to ease to around 10% this year, demand is likely to remain healthy, supported by infrastructure-related segments such as thermal power, renewable energy, data centres, and real estate. 

According to Crisil, manufacturers are expected to benefit from strong pricing flexibility, enabling them to pass on higher input costs to customers. This is likely to support operating profit growth despite rising competition from new entrants. 

The report, based on an analysis of 17 C&W manufacturers accounting for about 70% of the organised sector's revenue of ₹1 lakh crore, noted that the industry has recorded a compound annual growth rate of over 15% in volumes during the past five years. Growth has been driven by investments in digitalisation, urbanisation and rising power demand. 

"Volumes will continue to be supported by demand for housing wires and power cables, which account for nearly 50% of industry revenue, with investments worth ₹10-12 lakh crore lined up in renewables, power, real estate, and emerging sectors such as data centres and smart meters," said Mohit Makhija, Senior Director, Crisil Ratings. 

"However, volume growth is expected to moderate to around 10% this fiscal as higher prices, reflected in an estimated 18-20% increase in realisations, could lead to some deferment of discretionary capital expenditure by industrial users," he added. 

The rating agency noted that prices of key raw materials have surged amid tightening global supplies linked to the West Asia conflict. Copper and aluminium prices have increased by 22-27% while polyvinyl chloride (PVC), another critical input, has risen by about 12% over the past fiscal. 

Despite the increase in raw material costs, C&W manufacturers are expected to largely preserve margins through calibrated price increases. Crisil pointed out that cables and wires typically account for less than 5% of overall project costs, providing manufacturers with room to pass on higher expenses. As a result, absolute operating profits are projected to grow by 12-13% during the current fiscal, the report said. 

Meanwhile, strong demand and healthy cash flows are expected to encourage fresh capacity additions. Industry capacity utilisation touched 75% last fiscal, prompting manufacturers to expand production capabilities. 

"Overall, industry capacities are expected to increase by 20-22% by the end of fiscal 2027, with nearly half of the new capacity coming from fresh entrants," said Rucha Narkar, Associate Director, Crisil Ratings. She added that most expansion plans will be funded through internal accruals and equity, including by new players with strong financial flexibility, helping maintain healthy balance sheets and stable credit profiles. 

While higher raw material prices are expected to increase working capital requirements, these are likely to be met through channel financing and existing credit lines. Crisil estimates the industry's debt-to-EBITDA ratio will remain comfortable at 0.5-0.6 times while interest coverage is expected to stay strong at 16-17 times. However, the agency cautioned that rising competitive intensity and any slowdown in investments across key end-user sectors remain key risks to monitor.