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UTCEM - C&W foray to be EPS/value-accretive; strategic diversification into high-ROCE adjacencies is a key positive

UTCEM INR 18 Bn foray into the wires and cables segment may appear relatively modest in the context of the company’s overall balance sheet - representing only ~2% of its current capital employed - but we view the move as strategically and directionally positive. With the company targeting a 6-7% share of the domestic wires and cables market by FY30, the initiative represents a measured entry into an attractive adjacent category rather than an aggressive diversification bet

At full capacity utilisation, which we estimate could be achieved around FY30–31, the business has the potential to generate an annual revenue of ~INR 90 Bn. This translates into an asset turnover of around 5x, which we believe is achievable for a scaled-up wires and cables operation. Assuming EBITDA margin broadly in line with established industry players at 10–12%, the business could deliver an asset-level ROCE of over 20% at peak utilisation.

Importantly, our calculations suggest that the investment is estimated to generate shareholder returns of ~8%, making the project valueaccretive. From a capital-allocation perspective, the wires and cables business also compares favourably with several alternative deployment opportunities.

Jhagadia commissioning marks a key diversification milestone for UTCEM:

The company has reached an important execution milestone, with the Jhagadia facility having started commercial production on Sept 01, 2026, with an installed capacity of 10.98 lakh kilometres for house wires and light-duty cables, which was originally expected to commence in Q3FY27. Beyond the addition of a new manufacturing capacity, the development highlights the company's ability to establish and operationalise a new business segment within a relatively short timeframe

We view the entry into wires and cables as an extension of UTCEM's broader strategy to strengthen its presence across the construction and home-building ecosystem. While the financial contribution from this business is likely to remain limited in the initial phase, the opportunity could scale up meaningfully over the longer term, supported by UTCEM’s strong brand recall, extensive distribution network and deep presence within the building materials value chain.

Valuation:

We value UTCEM using an EV/CE-based methodology, assigning a 3.8x FY28E EV/CE multiple, which translates into a 12- month TP of INR 15,210/share. Importantly, our current valuation does not factor in any potential value accretion from the company’s wires and cables foray, as we prefer to monitor the execution and progress of the new business before incorporating its contribution. UTCEM remains our preferred large-cap cement play, supported by its superior long-term earnings visibility and strong execution capabilities

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