Detailed Narrative
Strong Q3 & 9M FY26 Performance Driven by Wires & Cables
R R Kabel reported its strongest ever Q3 and 9-month performance, with consolidated revenue reaching INR 2,536 crores in Q3 FY26, a 42.3% YoY increase, and INR 6,758 crores for 9M FY26, up 25.1% YoY. EBITDA for Q3 FY26 grew 86% YoY to INR 206 crores, while PAT increased 72.4% YoY to INR 118 crores. This robust growth was primarily attributed to the continued strength and disciplined execution in the Wires & Cables segment.
Wires & Cables Segment Outperforms with Volume Growth
The Wires & Cables segment was the primary growth engine, with Q3 FY26 revenue increasing by 48.6% YoY to INR 2,293 crores. This was supported by a robust 30% overall volume growth, driven by strong domestic and export demand across infrastructure, construction, and power-related applications. Segment profitability also improved significantly, with segment profit recording an 84.9% YoY growth to INR 199 crores in Q3 FY26. Capacity utilization stands at 70% for wire and 90% for cable.
FMEG Segment Stabilizes, Targets Q4 FY26 Breakeven
The FMEG segment experienced challenging conditions, with Q3 FY26 revenue at INR 243 crores, a modest increase from INR 240 crores in Q3 FY25. Despite flat growth, the company managed to significantly reduce losses to INR 5 crores in Q3 FY26, compared to higher losses in the previous year. Management expressed confidence in achieving breakeven at the EBIT level for the FMEG segment in Q4 FY26, supported by focused cost reduction and portfolio rationalization initiatives. Fans contribute 50% of FMEG revenue, lighting 32%, and appliances/switchgears 18%.
Strategic Capex for Capacity Expansion and Future Growth
R R Kabel is on track with its capex plan to invest approximately INR 1,200 crores over a three-year period, with about 80% allocated to the cable side. This investment aims to support an anticipated 18% annual volume growth. The company has already incurred INR 280 crores in capex during the first 9 months of FY26. This expansion is crucial to meet the sustained demand across infrastructure and construction-linked segments.
Managing Raw Material Volatility and Working Capital
The company faced significant volatility in copper and aluminum prices, with copper prices rising by 20-25% in Q3 FY26. Management emphasized a continuous process of passing on price impacts to consumers to maintain margins, noting a slight lag effect. Despite these pressures, overall working capital days remained stable at 56 days, with a target to maintain it within the 50-60 day range. Channel inventory increased by 5-7 days due to value increases, but not significantly in terms of days.
Export Market Focus and EU Trade Deal Benefits
Exports continued to show strong traction, contributing significantly to the Wires & Cables segment's volume growth. Approximately 40% of the company's exports are to the European Union. Management anticipates that the recently announced EU trade deal, which will reduce tariffs from around 3.7% to 0% for wires and cables, will be highly beneficial, likely impacting the business positively after 12 months. The current export mix is roughly 70% wires and 30% cables, with future growth expected from the cable side.
Long-Term Margin and FMEG Profitability Targets
R R Kabel aims to improve its overall margins by 100 basis points annually. Specifically, the company targets achieving double-digit EBIT margins of around 10.5% in its Wires & Cables business by FY28. For the FMEG segment, management projects a 25% growth rate and aims for EBIT margins in the range of 5% to 6% by FY28, building on the expected breakeven in Q4 FY26. The company's cost of borrowing is around 7%.