Housewires To Hyperscalers: How India's Rs 3-Lakh-Crore Data Centre Push Could Lift RR Kabel's Growth

The Indian wires and cables (W&C) market, estimated at $9.32 billion in 2024, is expected to nearly double to $17.08 billion by 2032. Until FY24, the industry has grown at a 10% CAGR since FY14. Organised players have consistently outpaced the unorganised segment, according to Ambit.

Beyond traditional drivers such as infrastructure and real estate, incremental demand is expected from renewables, digital infrastructure, data centres, and electric vehicles. Jefferies estimates that adding eight gigawatts of data centre capacity by FY30 alone will require investments of around $30 billion (Rs 2.7 lakh crore).

This gradual broadening of end-use applications reinforces the growth outlook for established, organised W&C players such as R R Kabel.

RR Kabel is an established player in India’s consumer electricals market. By value, it is the country’s fourth-largest W&C manufacturer. It is also the leading exporter from India in this category, with products shipped to more than 74 countries. This export footprint provides diversification, while the domestic market continues to anchor growth.

Within India, the company’s scale reflects its distribution reach. RR Kabel operates through more than 4,400 distributors, 4,500 dealers, and nearly 1.9 lakh retailers. It also runs India’s largest electrician loyalty programme, with more than 5.8 lakh electricians. The company operates across two business verticals.

The W&C segment continues to dominate the business and contributes close to 90% of total revenue (H1FY25). The portfolio includes housewires, industrial wires, power cables, and specialised cables for renewable energy, railways, and data centres.

The fast-moving electrical goods (FMEG) segment serves as an emerging growth driver. Its contribution to revenue remains about 10%. RR Kabel’s portfolio includes fans, lighting, switches, switchgear, and appliances. Ongoing investments continue to limit margins and profitability.

RR Kabel operates five integrated manufacturing facilities across India. The Waghodia facility in Gujarat and the Silvassa plant in Dadra and Nagar Haveli focus on wires, cables, and switches. The Roorkee, Bengaluru, and Gagret plants manufacture FMEG products. This separation allows the company to scale both verticals without operational overlap.

In the first half of FY26, revenue from operations rose 16.7% year-on-year to Rs 4,222 crore. Net profit increased 80.9% to Rs 206 crore, marking the company’s highest-ever half-yearly performance. Strong revenue growth improved operating profitability. Operating EBITDA — earnings before interest, tax, depreciation and amortisation — rose 76.4% year-on-year to Rs 319 crore. Margins expanded to 7.6% from 5.0% in H1FY25.

Revenue growth was led by a 19.3% increase in the W&C segment to Rs 3,805 crore. This reflected 16% volume growth and higher realisation. Segment earnings before interest and tax (EBIT) — operating profit before financing and tax costs — rose 64% to Rs 320 crore. Margins expanded 230 basis points to 8.4%.

Segment revenue fell 2.5% to Rs 418 crore, mainly due to seasonal factors and lower demand for fans and appliances. FMEG EBIT losses narrowed to Rs 19 crore from Rs 32 crore in H1FY25. Margins improved to -4.5% from -7.6%. Higher contribution margins, product changes, and cost control reduced losses.

Management aims to reach EBITDA breakeven for the FMEG segment by Q4 FY26. If achieved, it plans further margin improvement in the second half. Management targets 18% volume growth in FY26. This implies growth of about 23-24% in the second half. It cites a supportive demand environment.

RR Kabel’s long-term strategy centres on “Project RRise,” a three-year plan from FY26 to FY28. Under the plan, the company targets an 18% CAGR in W&C revenue and more than 25% CAGR in FMEG. EBITDA margins are expected to reach about 10.5% by FY28. Management targets a 2.5-times increase in Ebitda over this period.

Demand for energy-efficient and safety-compliant products continues to rise, supporting branded offerings under the “RR Signature” portfolio. A gradual shift towards higher-value products is expected to support margins.

To support growth, the company plans to invest Rs 1,200 crore to expand manufacturing capacity by 1.7 times. Capacity utilisation remains high, with the wire business operating at about 70% and the cable business close to 90%.

About 80% of the investment will go into the cables business. This includes adding 36,000 metric tonnes of cable capacity and 6,000 metric tonnes of wire capacity. The first phase of 12,000 metric tonnes is expected to be operational by Q4FY26. The full expansion is expected by Q3FY27. The plant will begin contributing to revenue from FY27.

The expansion positions the company as a supplier to sectors with rising demand, including renewable energy, data centres, and electric vehicles. These segments are central to plans to grow the domestic W&C business by 1.6 times. Within this strategy, data centres are emerging as a key demand driver.

The company is positioning itself as a solution provider as India expands digital infrastructure. Data centres, along with the rollout of 5G networks and the BharatNet project, drive demand for communication and high-speed data transmission cables.

Management expects data centres to undergo a structural shift and grow over the long term. RR Kabel offers products for data centres, including aluminium and copper flexible cables, low-tension power cables, battery cables, and specialised data and communication cables for high-speed connectivity.

At Rs 1,502 per share, R R Kabel trades at a price-to-earnings multiple of 42, compared with its closest peer, Polycab, at 46. Return on capital employed stands at 19.4%, and return on equity at 15.6%. Elevated copper prices may pressure W&C margins in the near term if costs are not passed on to consumers.

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