Usha Martin- the dope rope business story Usha Martin- the dope rope business story

Usha Martin – The Dope Rope Business

What holds the Bandra-Worli sea link or the most famous Howrah Bridge? The answer is metal wires! In today’s blog let’s deep dive into this industry and its growth potential with a micro bite of the macroeconomics! 

In the ocean full of companies we keep finding oligopolistic businesses (when a few companies exert significant control over a given market) for you and here comes Usha Martin Ltd with 60% of the market share in this segment.

What Does Usha Martin Do?

It manufactures Metal wires. That’s it? Yes. But do you know that even metal wires have components? Here’s the use case of metal wires: Lifting operations are required by every sector from oil drilling, mining evasion, construction, and more. 

All of these operations require safety and can make through reliable material as these ropes are required at all times of operations, the performance and accountability matter the most for them. What makes a steel wire stronger. stronger, and accountably stronger?

There are 3 major components to make the wire-

  1. Wire – Wire is the smallest part of a rope. Adding them (wires) together makes a strand. 
  2. Strand – More tiny wires together create a strand.
  3. Core – The core is the center of wires which gives it strength and supports strands to handle heavy weights.
Usha Martin - The Dope Rope Business

Why is Usha Martin Share Price Surging?

With a little punch of macroeconomics.

Usha Martin - The Dope Rope Business
Source- Business Standard News Report

The Indian market seems very confused while the Fed continuously increases the interest rates. Now by 0.75 percent as we speak. 

With these increasing Fed interest rates, a tight economy, and low capex growth, pressure is building on the regulator and banks to accept a more flexible capital structure that could soften the rate on infrastructure loans and let lenders fund more infrastructure projects.

The reason behind RBI/Fed increasing the interest rates is the rise in abnormal spending and inflation. Increasing interest rates is one of the best practices to control both, as the RBI aims to achieve normalcy.  

Once things normalise, the government would fuel the growth engine by infusing money into infrastructure, which shall then have a multiplier effect on the entire economy because the infrastructure industry forms the base of all the major sectors like manufacturing and the service sector.  

While the private CAPEX in India on infrastructure has been stagnant for the past 10 years and it was just the government CAPEX on infrastructure which was growing with a  13% CAGR.

Coming back to the company i.e what made us put the limelight on this company and how can you benefit from it?

  1. Investment contribution to GDP has bottomed down to 26.7% in FY21 from a previous peak of 36% in FY07.
  2. Almost all good corporates have healthy balance sheets
  3. Accommodative Monetary Policy: i.e the low cost of funds & Adequate Liquidity.
  4. Reduced corporate tax on new capital expenditures 
  5. 1.1 trillion to be spent on the national Infrastructure pipeline which is twice the spending done in FY20-25.
  6. China’s plus-one strategy is helping us to boost manufacturing.

Here’s a walkthrough of the entire business model:

Sector and Competition 

Till now you must have understood the use cases of metal wires and their importance in the industry. There are 3 major payers in this segment along with their financials

Bharat Wire Rope share – FundamentalsBharat Wire Rope share Financials
Bedmutha Industries Ltd share – FundamentalsBedmutha Industries Ltd shares Financials
Usha Martin share – FundamentalsUsha Martin share Financials
Competition along with their fundamentals

Among all three players, Usha Martin Ltd has 60% of the market share. Why? In a business like this, it’s important to have an office near the client’s site to help clients by providing them services and maintenance and Usha does this well. 

It doesn’t end here. Usha has a wide segment of products and its margin per product differs from it. For example, margin rope has different margins and elevation rope has a different margin, you get it. The cost of switching is high so the customer base is sticky so the exit rate is low.

The Sweet Spot for Usha Martin Share

India has an emerging market and to make emerging markets shine, the government has to spend on infrastructure. The reason being the corporate sector has strong balance sheets with positive cash flows and a cut in corporate expenditure will be a cherry on top. This means it’s more likely that companies will plan to expand.

Because of the reasons mentioned above, more opportunities for Usha Martin’s business include:

  1. PLI scheme (Atmanirbhar Bharat)

    To make India a manufacturing and export hub, the government’s Production Linked Incentive Scheme (PLI) provides incentives to producers. Players who meet their annual investment and production value targets will receive incentives between 4 percent and 6 percent under the PLI scheme.
  1. Good export numbers – Almost 50% of sales are export

    Usha Martin Ltd exports contribute to the mining sector and is expected to increase to 15% in the next 2-3 years. The company has received orders from Australian mines and other coal mines overly
  2. China +1 strategy

    China-Plus-One or just Plus One refers to a strategy in which companies avoid investing/manufacturing products only in China and diversify their businesses to alternative destinations.
  3. High Entry Barriers

    In terms of getting approval for the product, it’s hard for the new companies to justify their products to the clients so as a result, it’s hard for a new company to enter the market.
  1. Growth

    Usha Martin Ltd has been actively trying to maintain a healthy balance sheet. Not only this, the company is focusing on organic and inorganic growth in both Indian and international markets.

While we discussed metal wire does the question of “Why not use plastic rope as it is more durable” occur in your heads? Yes, plastic is more durable in ropes as it can survive more in critical climate conditions, and it’s less prone to corrosion. 

But do you know plastic ropes are more expensive than metal ropes as they need high-performance materials like LCD, HMPE, and others (more the strength, higher the price).

Apart from being expensive, plastic ropes need daily checks as the fibers become susceptible to abrasion and UV rays and due to this, it goes for a toss. While safety and maintenance can be done in Metal ropes.

Engineering3-4 Months
Underground3 Years
Mines1 Month
Oil Drilling30-45 Days
Commercial Elevators12-18 Months
Elevators2-3 Years
Cranes1-2 Months

The above data shows the lifetime of a metal rope.

The Sour Spot for Usha Martin Share

The following are the few major factors that can affect the business of Usha Martin Ltd.

1. Raw materials

For Usha Martin share, steel is the raw material which means any fluctuation in metal prices will directly affect the margins of the business.

2. Usages Plastic Ropes

Plastic is more durable than Metal ropes and it’s less prone to corrosion. If the prices of metals go up or if solutions are made to prevent plastic from UV rays, both situations might hurt the margins of Usha Martins 

3. Promoter Feud

This corporate business has had a little typical Indian serial drama in the past (and not directed by Ekta Kapoor :p)  but it has been resolved. 


Taking into account India’s consolidated corporate capex, its healthy balance sheet, and positive cash flow, it is more likely that we’ll see a breakout in infrastructure

It is possible that the demand for metals, wires and other manufacturing goods may surge with the infusion of funds in infrastructure from both corporations and the government. 

For the Usha Martin Business, this can work wonders. Additionally, we shouldn’t ignore any innovations in plastic and metal prices. This stands to impact the future of metal wires as we know it. But whether or not that day will arrive remains to be seen.

So what do you think about Usha Martin Ltd, do you think it’s a dope rope business? Let us know on Twitter @dhanhq and subscribe (Top right on the desktop, scroll to the bottom on mobile) to our weekly newsletter for interesting stories and deep market insights!

Let us know if you have any thoughts or feedback about what we should cover next.

See you in the next one 🙂

You can read more such interesting stories like:

  1. Business analysis of – Amber Enterprises
  2. Everything about forex trading in India
  3. Trading Psychology by Abhishek Kar

Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.