India's power grid boom: Who stands to win?

Summary: With electrification seeing a boom in India, cables and transformers are seeing strong demand. However, it doesn’t come without its fair share of hurdles. Here, we look at the risks and potential growth opportunities lying ahead, and what investors should be mindful of.

India has been adding renewable capacity at a brisk pace. But new gigawatts on paper do not automatically translate into electricity at the socket. For that, the grid has to keep up. Transmission lines, substations and transformers are what turn generation into usable power.

This is where two relatively unglamorous pieces of hardware come in: cables and transformers. They quietly determine whether power generated in one corner of the country actually reaches homes, factories and data centres elsewhere.

Think about the range of activities riding on them. Renewable evacuation. Rail and metro electrification. Data centres. Industrial capex. EV charging. Housing and commercial real estate. All of it depends on cables to carry power and transformers to regulate it.

Demand today is strong, arguably unprecedented. But the path from demand to durable profitability is not straightforward. To understand who really benefits, you have to look at the risks alongside the opportunity. We also examine three companies that could ride India’s electrification push.

Not one neat ‘electricals’ story

At first glance, cables and transformers may look like a single ‘electricals’ theme. In reality, they are heavily exposed to commodities.

Copper is central to cables and transformers. Aluminium is widely used as well, especially in certain cable applications. Specialised steel is critical in transformers. In the wires and cables industry, raw materials can account for 65-75 per cent of revenue.

That has two important consequences.

First, margins are often about timing rather than structural pricing power. When copper prices move, passing them on to customers usually takes time. A strong quarter may reflect favourable inventory positioning rather than a lasting improvement in economic conditions.

Second, growth consumes cash. As utilisation rises, companies need to hold more inventory and extend more credit. In project-heavy segments, revenue can grow much faster than operating cash flow.

That said, these are not pure commodity businesses. In higher-end cables and transformers, differentiation comes from product complexity, qualification approvals, testing capability, execution track record and the balance sheet strength to fund working capital. Over a cycle, the winners tend to be those who manage product mix and cash flows with discipline.

Cables are a ladder

It helps to think of cables not as one market, but as a ladder.

At the bottom are retail wires and low-voltage building cables. This is largely a distribution game. Brand recall, dealer networks and electrician loyalty matter. If commodity pass-through is managed well, cash cycles can be relatively faster. Margins are steadier, but competition is intense.

In the middle sit industrial and project cables. Orders are larger and more lumpy. Tendering and technical specifications matter more. Receivable risk increases. A single delayed project can strain working capital for months.

At the top are higher-end, specialised cables used in grid and heavy industrial applications. Fewer players operate here. Qualification takes time. Execution risk is higher, but so are entry barriers.

For investors, where a company sits on this ladder makes a difference. Retail-heavy players typically offer greater stability. Project-heavy players may post faster revenue growth, but with more balance sheet stress. Moving up the value chain can strengthen competitive positioning, but it also adds complexity.

Transformers: Lesser known, but equally imprortant

Though less visible than cables, transformers are equally critical to the grid. Here, qualification and delivery performance matter. Once approved, vendors can enjoy sticky relationships.

Though high utilisation supports revenue visibility and operating leverage, it also pushes up working capital.

The key is to watch whether operating cash flow keeps pace with profit growth as order books expand.

Growth comes with a reality check

Industry data support the growth story. A CRISIL report suggests organised wires and cables players could see mid-teens growth, backed by spending in power, railways and real estate. The capex pipeline points to meaningful demand through FY26. In transformers, domestic sales could grow at 10 to 11 per cent annually, with utilisation around 80 per cent.

These are healthy numbers. But two reality checks matter more than headline growth.

The first is raw material intensity. When copper and aluminium dominate the cost base, margin expansion can be cyclical rather than structural.

The second is supply response. Capacity additions are already underway. Sustained high utilisation inevitably attracts fresh investment. In past cycles, tight conditions have drawn in new competition.

So the real question for investors is not whether demand exists. It clearly does. The more important question is whether current margins and valuations assume that today’s favourable conditions will last longer than history suggests.

In this space, growth shows up early. Durable value creation usually takes longer.

Three companies that stand to benefit from the power grid boom

#1 Polycab India

Polycab India has been on a strong footing in recent years. During FY23-25, its revenue grew by nearly 23 per cent annually, while total sales crossed Rs 220 billion in 2025, ahead of its Project LEAP target of Rs 200 billion by FY26.

A key reason behind its blockbuster numbers is scale. Larger procurement volumes lead to better negotiation power on raw materials, while a wide distribution network supports retail wires. Lastly, product breadth allows participation across segments.

For investors, the key test is whether scale translates into sustained return on capital and steady cash conversion, not just higher sales.

#2 KEI Industries

KEI Industries has historically been cable-focused and steadily expanded its retail presence over the years. Over FY22 to FY25, it grew revenue and net profit (profit after tax) by roughly 19 per cent and 23 per cent annually.

Two key developments need to be kept in mind. First, the company has expanded into higher-end cable categories and increased the retail contribution from under 30 per cent a few years ago to nearly 50 per cent.

Second, the market’s expectations of 17 to 18 per cent annual growth assume the cable cycle remains healthy. Delivered wires and cables grew by around 22 per cent over FY23 to FY25 explains that optimism.

For investors, the mix strategy aims to combine growth and stability. But it also requires tight control over receivables and inventory as volumes rise.

#3 R R Kabel

R R Kabel began as a retail-heavy wires business. In FY23, roughly 74 per cent of revenue came from B2C and about 89 per cent from wires and cables, with around 5 per cent branded market share.

During FY23-24, the company’s wires and cables revenue grew at around 16.1 per cent per annum. Further, R R Kabel has set a target of 16-18 per cent volume growth for FY26 and Rs 14.5 billion of capacity investment, along with a shift in export markets.

The strategy is clear: capture more of the capex-driven cable opportunity without undermining the retail cash base.

For investors, the balance between growth and working-capital discipline will determine outcomes.

The takeaway

It is no secret that India’s power grid is seeing a boom. However, investors need to remember that cables and transformers come with their fair share of risks. What’s more, profitability remains cyclical, owing to factors such as commodity swings, supply additions and capital discipline.

This is not a fleeting demand spike. But neither is it a guaranteed margin story. In this sector, growth is visible early, while value creation shows up later.

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