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    R R Kabel

    RRKABELGood
    Capital Goods·1 Aug 2025
    Management Summary

    R R Kabel reported a strong Q1 FY26 performance, driven by robust demand in wires and cables, improved operational efficiency, and strategic pricing. The company achieved significant growth in revenue, EBITDA, and PAT, alongside margin expansion. While FMEG revenue saw a slight decline, losses in the segment narrowed considerably, indicating progress towards profitability. Management remains confident in achieving its full-year growth and margin targets, supported by ongoing capacity expansion and product mix optimization.

    Highlights

    7

    • Revenue from operations stood at ₹2,058.6 crores, marking a solid 13.9% year-on-year growth.

    • EBITDA rose sharply to ₹143.1 crores, up 50% YoY from ₹95.4 crores in Q1 FY25.

    • EBITDA margin expanded to 7% in Q1 FY26, compared to 5.3% in Q1 FY25, driven by efficiency gains.

    • Profit After Tax (PAT) grew significantly by 39.4% to ₹89.8 crores from ₹64.4 crores in the prior year.

    • The wire and cable segment posted revenue of ₹1,833.5 crores, up 16.2% YoY, with segment profit rising to ₹139.1 crores.

    • Overall volume growth was approximately 6.5%, with wires growing by 10% and cables by 2%.

    • The FMEG segment narrowed its segmental loss to ₹7.1 crores from ₹20.7 crores in Q1 FY25, despite a marginal revenue decline to ₹225.1 crores.

    What Changed2

    vs Q2 FY26

    Guidance items8 → 13 (+5)Risks discussed4 → 3 (-1)

    Key financials

    Single quarter

    04 metrics
    1. 01Revenue from Operations₹2,058.6 Cr+13.9%YoY
    2. 02EBITDA₹143.1 Cr+50%YoY
    3. 03EBITDA Margin7%
    4. 04PAT₹89.8 Cr+39.4%YoY

    Segment breakdown

    • Wire and Cable₹1,833.5 Cr89.1%
    • FMEG₹225.1 Cr10.9%
    Donut· Share of Revenue

    Guidance & targets

    13
    CategoryTargetPriority
    Volume
    Overall Volume Growth
    18%
    		High
    Volume
    FMEG Growth
    20-25%
    		Medium
    Volume
    Cable Business Growth
    25%
    		High
    Volume
    Wire Business Growth
    10-12%
    		High
    Profitability
    EBIT Margin Improvement
    100 bps
    		High
    Profitability
    FMEG EBIT
    Positive
    		High
    Capex
    Total Capex
    ₹1,200 crores
    		High
    Capex
    Full Year Capex
    ₹300 crores
    		Medium
    Working Capital
    Creditor Days
    maintain at current level
    		High
    Capacity
    Cable Capacity
    doubling
    		High
    Capacity
    Cable Capacity
    2x of current doubled capacity
    		High
    Revenue Mix
    Export Revenue Contribution
    up to 35%
    		Medium
    Revenue
    Top Line from Capex
    ₹4,500 crores
    		High

    Risks & concerns

    4
    RiskSeverity

    Commodity price volatility (copper)

    Management stated that copper volatility is part of the business and they have a mechanism to pass on price changes to consumers based on 15-20 day trends. — Management acknowledged

    medium

    US tariffs on copper products (wires and cables)

    Management noted that things are unclear, but tariffs appear high (around 50% on copper products), potentially impacting viability in the US market, though their overall US exposure is low (2.5%). — Analyst acknowledged

    medium

    Seasonal trends impacting FMEG segment (fans)

    Early monsoon had a 'tad impact' on overall FMEG revenue, but management remains optimistic due to strengthening distribution and improved product mix. — Management acknowledged

    low

    Areas of Evasion(1)

    • exact current manufacturing capacity figures

    Q&A highlights

    3

    “So two things happened in this quarter, Dhruv. First, April was not that much great in terms of cable and later on few big projects which are going to delivered in second quarter. So we could not achieve that kind of volume growth in Q1 itself. But as a growing business and looking to my overall order book, current quarter we are on track with our overall growth plans in cable.”

    Analyst questioned the low 2% cable volume growth in Q1 against the 25% guidance, prompting management to explain seasonal trends and project deferrals impacting the quarter.

    asked by Dhruv Jain

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY26 Financial Performance Overview

    R R Kabel reported a strong Q1 FY26, with revenue from operations growing 13.9% year-on-year to ₹2,058.6 crores. EBITDA saw a significant 50% increase to ₹143.1 crores, leading to an EBITDA margin expansion to 7% from 5.3% in Q1 FY25. Profit After Tax (PAT) also demonstrated robust growth, up 39.4% to ₹89.8 crores, underscoring the company's focus on profitability and disciplined capital allocation.

    02

    Segmental Performance: Wires & Cables

    The wire and cable segment was a key growth driver, posting revenue of ₹1,833.5 crores, a 16.2% increase from Q1 FY25. Segment profit rose to ₹139.1 crores. Overall volume growth for the business was 6.5%, with wires growing approximately 10% and cables growing 2%. Management attributed the lower cable growth in Q1 to seasonal trends and deferrals of large projects to Q2, but expects 25% growth in cables and 10-12% in wires for the full year.

    03

    Segmental Performance: FMEG

    The FMEG segment showed progress in narrowing its losses, reporting a segmental loss of ₹7.1 crores, significantly down from ₹20.7 crores in Q1 FY25. This improvement occurred despite a marginal revenue decline to ₹225.1 crores from ₹230 crores. Management aims for the FMEG business to be EBIT positive on a yearly basis within the current fiscal year, projecting a growth of 20-25% for the segment, driven by a focus on premium and mid-premium products.

    04

    Capex and Capacity Expansion Plans

    R R Kabel plans a total capex of ₹1,200 crores over the next three years, with approximately ₹50-75 crores incurred in Q1 FY26 and a full-year capex guidance of around ₹300 crores. The company is pursuing modular capacity expansion, particularly for cables, aiming to double its cable capacity by the end of this year and then double that again over the next three years. This expansion is expected to generate a top line of ₹4,500 crores at full operational level.

    05

    Export Market Dynamics and US Tariffs

    The export business continues to scale steadily, with management noting higher volume growth in exports during Q1. While the majority of exports are to Europe and the Middle East, the company is exploring new geographies and products. Management acknowledged uncertainty regarding a potential 50% US tariff on copper products, which could impact viability, but noted their overall US market exposure is low at around 2.5% of total revenue. The company aims for export revenue contribution to reach up to 35%.

    06

    Operational Efficiency and Margin Improvement

    The company's EBITDA margin expanded to 7% in Q1 FY26, an improvement of 170 basis points year-on-year, driven by strong purchase strategy, effective production planning, supply chain management, and efficient operations. Management reiterated its guidance of a 100 bps improvement in overall margins for FY26. Product mix optimization towards higher-profit products and increased scale in FMEG are also contributing to margin enhancement and loss reduction.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.