Rs 2.8 lakh cr data centre boom: 2 stocks powering AI without making a single chip

They also require significantly higher cable density per square foot, creating demand for specialised wires, power cables and optical fibre. This is also changing product demand. Data centre infrastructure needs reliable, flame-retardant and low-smoke flexible wires, structured copper cabling and optical fibre. As India expands its digital infrastructure, demand for these specialised products is expected to increase.

The opportunity is backed by a significant capacity expansion pipeline. India's installed data centre capacity is projected to reach 1.7-2 gigawatts (GW) by the end of 2026 and 4-5 GW by 2030. FE Stock Insights on WhatsApPGet instant alerts on high-conviction investment themes and fundamental deep dives—direct from Financial Express.Join now The expansion is backed by nearly $30 billion (around ₹2.8 lakh crore) in planned data centre investments and over $126 billion in commitments from hyperscalers.

Each gigawatt of capacity requires thousands of kilometres of high-density fibre and power cables. This is creating a long-term demand opportunity for cable manufacturers. Against this backdrop, this article analyses two major Indian wire and cable companies that are expanding into the data centre market. We look at the Q2FY27 earnings to understand how these companies are performing and positioning themselves to capture the growing data centre opportunity. #1 R R Kabel: Quietly Pivoting to Dominate India's 66 kV Data Centre Pipeline R R Kabel operates in two business segments: Wires and Cables and Fast-Moving Electrical Goods (FMEG).

Wires and Cables account for 90% of the total revenue, while the remaining 10% comes from the FMEG segment. The Wires and Cables segment includes house wires, industrial wires, power cables, control cables and solar cables. R R Kabel: 52% Revenue Growth Counters Near-Term FMEG Headwinds The company has recently added medium-voltage power cables with a capacity of up to 66 kV to its portfolio. The FMEG segment includes fans, lighting, switches, switchgear, and home appliances.

Under the 'RR Signature' brand, the company has also expanded into the kitchen appliances category, which includes items such as mixer-grinders and electric cooktops. Export Dominance & Q2 Margins R R Kabel sells products across India and exports to over 66 countries. It is India's largest exporter of wires and cables. The network includes 7,200+ dealers and distributors. Products reach over 215,000 retail stores across India.

R R Kabel reported strong consolidated financial performance for Q2FY27. Revenue from operations grew by 52% year-on-year to ₹3,284 crore, driven by a 53% increase in the wires and cables business and a 42% rise in the FMEG segment. Wires and Cables volume grew in the high single digits during Q2. This segment recorded a 57% increase in Profit Before Tax (PBT) to ₹282 crore. Its PBT margin stood at 9.4%, up from 9.2% recorded in Q2FY26.

FMEG Losses Narrow as Management Targets Full-Year Operational Break-Even The FMEG segment is still in investment mode. Thus, it reported a segment loss of ₹12.5 crore (similar to Q2 FY26) due to seasonally lean demand. For H1FY27, the segment margin narrowed to -2.2% from -4.5%. This aligns with management's goal of achieving the segment break-even target for the full year. The net working capital cycle improved to 46 days as of September 2026, down from 49 days in Q4FY26 and 50 days in Q2FY26.

Management has set a target of 14%-15% growth in wire and cable volumes for FY27. Volume growth is expected to accelerate into the high teens in H2FY27. In the Q2 earnings conference call, management maintained FY27 margin guidance at 9.5% (H1FY27: 9.6%). Under its 3-year strategic plan (Project RRise), R R Kabel aims to achieve a long-term segment EBIT margin of 10.5%. Export sales are projected to maintain a steady share of 32%-35% of total revenue in H2FY27.

Hyperscale Expansion: How the ₹77-Crore UM Cables Buyout Unlocks 66 kV Feeds R R Kabel views hyperscale data centres and 5G fiberization as significant growth opportunities. To meet the needs of these B2B institutional clients, the company has expanded its portfolio to include high- and medium-voltage cables rated up to 66 kV. 64 lakh crore semiconductor push Furthermore, to better capitalise on this opportunity, R R Kabel acquired UM Cables (a subsidiary of Usha Martin) for ₹77 crore.

The acquisition adds optical fibre and communication cable manufacturing capabilities. This positions the company to tap into hyperscale data centre build-outs and 5G telecom fiberization. This plant previously operated at a lower capacity. Management is finalising a business plan to increase production and generate additional revenue starting from FY28. R R Kabel Share Price #2 Polycab India: Eyes 1.5x Industry Growth as Data Centre Feeds Push Wires Polycab India operates across three business lines: Wires and Cables, FMEG, and Engineering, Procurement, and Construction (EPC).

Wires and Cables is the company's largest business segment. Polycab manufactures low-voltage, medium-voltage, and high-voltage cables, as well as wires. Polycab holds an estimated 30% to 31% market share in India's organised wires and cables market. Domestically, the Western region contributes the most revenue, followed by the Southern, Northern and Eastern regions. Exports accounted for 5% of consolidated revenue in Q2FY27.

Financial Performance: Revenue Reaches ₹9,898.9 Crore as Net Profit Climbs 43% Consolidated revenue increased by 53% year-on-year to ₹9,898.9 crore in Q2FY27. Revenue rose 47% in wires and cables, 124% in FMEG and 53% in the EPC business. EBITDA rose by 39% to ₹1,422.5 crore. The EBITDA margin stood at 14.4%, compared to 15.8% in Q2FY26. Net profit surged by 43% to ₹990 crore. Segment Analysis: FMEG Top-Line Doubles as Wires Deliver ₹1,178 Crore EBIT The wires and cables segment EBIT (earnings before interest and tax) rose 39% to ₹1,178.2 crore, with a margin of 14.2%.

FMEG revenue grew 124% to ₹993.1 crore, with a margin of 10.1%. The EPC business worked at a lower margin of 7.2%. Institutional Play: Capturing 15 MW Projects Ahead of FY28 EHV Commissioning Polycab India sees data centres as a key long-term growth market in both domestic and export channels. Polycab supplies conventional electrical cables for general data centre power and utility infrastructure.

Through its institutional division, Polycab supplies low voltage (LV), medium voltage (MV), and high voltage (HV) cables for data centre construction. Polycab is also developing specialised products, including optical fibre cables, to expand its presence in the data centre infrastructure space. Private capital additions are currently appearing in regional pockets in project sizes of 10 MW to 15 MW.

Management noted that tracking the actual execution speed of these announced projects will be critical. In export markets like the US, demand for Polycab's cables is supported by investments in data centre facilities, artificial intelligence infrastructure, and the modernisation of power grids. Polycab works with market representatives in the US, who supply power cables directly to institutional buyers and data centre operators.

Long-Term Outlook: FY28 EHV Facility and Margin Normalisation Targets Looking ahead, Polycab aims to grow volumes at 1.5x the broader industry growth rate. The company has maintained its long-term EBITDA margin guidance of 11% to 13%. Management expects margins to normalise over time from their current elevated level (14.2% in Q2FY27) and return to the projected range. Polycab is also constructing a dedicated Extra High Voltage (EHV) cable manufacturing facility.

The plant is scheduled for commissioning during FY28. This will expand Polycab's technical capability in high-voltage utility transmission. In the FMEG business, management aims to achieve revenue growth 1.5 to 2.0 times the industry growth rate across all product categories. It expects long-term EBITDA margins to settle between 8% and 10% by FY30. Profitability is driven by product premiumization, with premium fans accounting for 33% of fan sales and premium lighting reaching 38%.

Polycab Share Price Valuation Divergence: P/E Premiums Leave Little Margin for Error R R Kabel and Polycab India are trading below their respective three-year median P/E multiples. However, both still trade at a premium to the industry average of 23.3x. R R Kabel trades at 34.5x earnings, compared with its three-year median of 51.3x. Polycab India is valued at 37x, against its three-year median of 47.8x.

While valuations have moderated from their historical averages after the recent correction, they remain above the industry multiple. On the return ratio front, both companies have reported stronger capital efficiency than the industry. Polycab India leads with a Return on Capital Employed (ROCE) of 33.2% and Return on Equity (ROE) of 23%. R R Kabel has a ROCE of 28.1% and ROE of 21.3%. Both companies are also ahead of the industry averages of 21.1% for ROCE and 18.8% for ROE.

Valuation Comparison (X)ParticularsPrice-to-Earnings MultipleReturn RatiosCompany3Y MedianROCE (%)ROE (%)R R Kabel34.551.328.121.3Polycab37.047.833.223.0Industry23.321.118.8Source: Screenerin (Data as of October 30, 2026) India's data centre expansion is creating another growth opportunity for the wires and cables industry. Rising investments in hyperscale facilities, AI infrastructure, power transmission and grid modernisation are driving demand for power cables.

R R Kabel and Polycab India are positioning themselves to capture this opportunity. R R Kabel's entry into 66 kV cables and acquisition of UM Cables strengthen its presence in medium-voltage power and communication cables. Meanwhile, Polycab is expanding its institutional business, developing specialised cable products and setting up an Extra High Voltage manufacturing facility. However, the opportunity will not translate into revenue immediately.

Keep these stocks on your watchlist to see how they scale up their businesses. Disclaimer: Note: Throughout this article, we have relied on data from and the company's investor presentation. We used an alternative, widely accepted and widely used source of information only when the data were unavailable. This article is meant only to share interesting charts, data points, and thought-provoking opinions.

It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only. About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. He simplifies complex concepts and shares honest perspectives on startups, listed Indian companies, and macroeconomic trends.

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