R R Kabel — Q4 FY26 earnings call

So one thing like, our SIT have increased, lot many exports are remain in transit also during that period. And as you know, in international business always till this material reaches to customer, it remains in my sales in transit only. So my inventory is a bit high. When you compared with last year figures, of course, you know metal prices have like raised by almost 20%, 30%. So there is impact on value side also. But otherwise in volumes we are quite on track with our normal inventory records as per increasing volume side of the business.

Analyst questioned a significant increase in inventory, and management clarified it was primarily due to exports in transit and higher metal prices, not operational inefficiency, with days only up by 8.

Asked by Manoj Gori

Comparatively, when you will compare with Q4, of course, it seems there may be some more impact in Q1 of this year. Reason being that like in month of March we saw major impact, and since it is still continue, there will be higher impact in this quarter, it seems. It depends how long war will go on.

Management acknowledged that the ongoing Middle East conflict, which began impacting in March, could lead to a higher impact on exports in Q1 FY27, indicating a near-term risk.

Asked by Manoj Gori

Yes. So if you see in Project RRise, we had planned to have improvement of 300 basis points in my wire and cable margins by FY28. Like, if you see currently already we are on track. We have achieved the almost 130 basis points improvement in margin. Even going forward, we are like quite positive to achieve our target of 10.5% EBIT margins in wire and cable segment by FY28. Same way, of course, in FMEG there are some impact what we have planned to achieve breakeven in March 2026 could not be achieved. There were two major reasons. One, of course, like, the volumes what we were expecting due to bad weather and it could not be achieved. At the same time input cost, like there was a major impact, even in FMEG input cost, where in that industry takes some more time to pass on and therefore our gross margins are impacted in Q4 to some extent and therefore now we have, now we are targeting to achieve breakeven in FY27.

Management confirmed W&C is on track for 10.5% EBIT by FY28, having achieved 130bps improvement. FMEG breakeven was pushed to FY27 due to lower volumes from bad weather and input cost pressures.

Asked by Manoj Gori

Yes. Ashish, if you see my numbers are already reflecting that March, or particularly this quarter, we had a good growth. Even March was also a normal month. Of course, we have seen so much like volatility in prices but if you see as a overall business as a whole then, we did not find any major destocking or demand side even in domestic market. ... What feedback we have from second uptick also it seems that demand is normal and that is like if you see March or after that April also sales is going normal. I don't think there will be major issue in domestic side of demand.

Analyst inquired about potential domestic demand impact and channel inventory correction. Management stated that domestic demand remained normal in March and April, with no major destocking observed.

Asked by Ashish Kanodia

Like, we used a letter of credit facility, so that we can, e effectively manage our working capital. We used these trade facilities more effectively in this quarter.

Management explained the increase in payable days was due to effective utilization of letter of credit facilities for working capital management, implying a strategic financial decision rather than a red flag.

Asked by Ashish Kanodia

Actually, we have planned our this capex plan in a such a way that every six months we will keep adding few capacities. It will be not like one overnight I will get big capacity overnight neither I can build sales side neither capacity also. It's when we have targeted 18% volume growth year-on-year or in which also majority will be through cable side. It means since in cable already we are at optimum utilization of more than 90% so to meet this growth plan we will keep adding capacity. In every six months we'll keep adding few capacities.

Management detailed their phased approach to capacity expansion, adding capacity every six months, to support the 18% volume growth target, particularly in cables where utilization is over 90%.

Asked by Achal Lohade

No. Not particularly for us, we do not see any such kind of challenge because overall, we have like, our, we are establishing our B2B business line and particularly growth plan in this area and I don't find there will be excess capacity looking to the overall demand in cable side of the business.

Analyst raised concerns about potential oversupply in the cable industry due to widespread capacity additions. Management expressed confidence, citing their B2B focus and overall demand outlook.

Asked by Achal Lohade

Yes. As you know, in our case, whatever prices, in our raw material prices we pass on to our customers in by changing our selling price and by as a thumb rule, like whenever there is plus or minus raw material prices by 2% or 3%, then we change our selling prices also. Since this is continuous process and we see average of last 15-20 days, based on that changes, we keep changing our selling prices, and this is continuous process.

Management clarified their pricing strategy, indicating a continuous process of passing on raw material price changes (2-3% threshold) to customers, which helps manage volatility.

Asked by Vidit Trivedi