Detailed Narrative
Robust Q2 FY26 Performance Driven by Wires & Cables
R R Kabel reported a strong Q2 FY26 with revenue from operations growing 19.5% year-on-year to ₹2,163.8 crores. This performance was primarily fueled by the wires and cable business, which saw a 22.3% YoY revenue increase to ₹1,971.2 crores, supported by a 16% volume growth. The company also achieved its highest ever half-yearly revenue in H1 FY26, growing 16.7% YoY.
Significant Margin Expansion and Profitability Improvement
The company demonstrated significant profitability improvement, with EBITDA rising 105.8% YoY to ₹176.1 crores, and EBITDA margin expanding to 8.1% from 4.7% in Q2 FY25. Profit after tax (PAT) surged 134.7% YoY to ₹116.3 crores, with PAT margin reaching 5.4% from 2.7%. For H1 FY26, PAT stood at ₹206 crores, an 80.9% YoY increase, with margins improving by 173 basis points to 4.9%.
Strategic Investments and Capacity Expansion
R R Kabel is committed to a long-term expansion plan involving an investment of ₹1,200 crores, with approximately 80% allocated to the cable segment. This investment aims to enhance production capabilities up to 220 kV. Current utilization levels are healthy, with the wire business at almost 70% and the cable business at 90%, indicating strong demand and efficient capacity deployment.
FMEG Segment Recovery and Breakeven Target
The FMEG segment experienced a marginal revenue decline of 2.9% YoY to ₹192.6 crores in Q2 FY26, primarily due to challenging market conditions in fans and appliances. However, management anticipates a festive-led recovery and expects the FMEG segment to achieve breakeven by Q4 FY26. The company is focusing on product rationalization, operational efficiency, and channel expansion to drive future growth and profitability in this segment.
Long-term Profitability and Volume Growth Targets
Management has set ambitious long-term targets, aiming for EBIT margins in the wire and cable business to be in the range of 10.5% to 11% by FY28. The company also targets an 18% volume growth on a CAGR basis. Furthermore, R R Kabel is targeting a Return on Equity (ROE) of more than 20% in the next two to three years, reflecting strong confidence in its growth trajectory and operational efficiency.
Diversified Market Strategy and Export Growth
R R Kabel continues to benefit from robust domestic demand, driven by construction activity, infrastructure expansion, and government electrification initiatives. Export demand also improved, particularly from Europe and the Middle East, which constitute 75-80% of export revenue. The company is actively diversifying its geographical footprint and expanding its global presence, with new customer additions contributing to export growth.