Metrics raised 2
- FY27 operating margin guidance raised to 11-12% (from 11% hurdle previously)
- FY27 export share target raised to 17-18% of sales (from 16% in FY26)
Metrics cut 1
- FY27 Sanand revenue guidance cut to ₹1,500-2,000 crore (from an erroneously stated ₹3,000 crore)
Event Participants
Executives
2 Anil Gupta, Rajeev Gupta
Analysts
14 Achal Lohade, Akshen Thakkar, Bhavani Kumavat, Bharat C. Shah, Disha Charmia, Manoj Gori, Natasha Jain, Pathanjali Srinivasan, Praveen Sahay, Pulkit Patni, Rahul Maheshwary, Raman KV, Shirom Kapur, Umang Mehta
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Net Sales | ₹3,185 crore | +23% YoY (₹2,590 crore Q1 FY26); strong domestic demand across infrastructure, housing and renewables |
| Wire & Cable Sales Growth | +24.4% | Total W&C revenue growth; growth deliberately calibrated to balance capital allocation for both working capital and capex |
| Domestic Wire & Cable | ₹2,784 crore | +29% YoY; construction phase in housing, commercial spaces and infrastructure driving momentum |
| Exports | ₹341 crore | -9.1% YoY (₹375 crore); impacted by Middle East conflict halting shipments and US customs duty issues; management expects full recovery with FY27 export share of 17-18% of sales |
| EHV Cable Sales | ₹186 crore | +47% YoY (₹126 crore); driven by transmission and renewable energy projects |
| EPC Sales | ₹43 crore | -29.5% YoY (₹61 crore); lower EPC execution, EHV-EPC component ₹18 crore |
| Stainless Steel Wire Sales | ₹53 crore | +3.9% YoY (₹51 crore); stable niche business |
| EBITDA | ₹415 crore | +39.5% YoY (₹297 crore); margin 13.04% vs 11.49%; product mix, retail shift, and operating leverage |
| Operating Margin (W&C) | 12.43% | Improved YoY from ~10.9%; mix of EHV, retail, and export margins plus lower OpEx-to-sales ratio |
| PAT | ₹274 crore | +40% YoY (₹195 crore); margin 8.61% vs 7.56% |
| Other Income (Interest on FDR) | ₹14.59 crore | vs ₹28.77 crore YoY; lower as QIP funds get deployed |
| Order Book | ₹4,292 crore | EPC ₹271 crore, EHV ₹793 crore, domestic cable ₹2,400 crore, export ₹822 crore |
| B2C / Dealer Contribution | 59% | Up from 51% earlier; focus on retail distribution for lower working capital requirements |
| Active Dealers | 2,128 | As on June 30, 2026 |
| Cash & Bank Balances | ₹1,054 crore | Includes unutilized QIP proceeds of ₹303 crore |
| Book Value | ₹725.94 | vs ₹697 on March 31, 2026 |
| Capex Incurred (Q1) | ₹191 crore | Sanand portion ₹180 crore; cumulative Sanand spend ₹1,722 crore |
| Credit Rating | AA+/A1+ | CARE and ICRA long-term/short-term |
| Capacity Utilization | Cable 72%, House Wire 61%, SS Wire 91%, Comm Cable 45% | Sanand Phase 1 at ~50% utilization; ramp-up continuing month-on-month |
Geographic & Segment Commentary
Domestic Wire & Cable: Grew 29% YoY to ₹2,784 crore, led by strong demand across power T&D, data centers, renewable energy, EV infrastructure, railway electrification, housing and commercial spaces. Retail/distribution share rose to 59% of sales (~40% growth), aided by brand investments (including IPL sponsorships) and an expanded dealer network of 2,128 active dealers. Wire growth outpaced cable growth on construction activity.
Exports: Declined 9.1% YoY to ₹341 crore due to non-execution of Middle East orders (Iran conflict) and US customs duty headwinds. Management remains confident of full-year recovery, guiding export share of 17-18% of FY27 sales (vs 16% in FY26), with resumed shipments at higher freight costs. Geographic strategy spans US (oil & gas, data centers, distribution), Australia (solar/wind, industrial), Middle East (oil & gas refineries, upstream), and Africa (transmission/distribution utilities, refineries).
EHV Cables: Sales grew 47% YoY to ₹186 crore; order book ₹793 crore. EHV operating margins at ~15% vs 10.5% institution / 11% retail / >11% export for LV-MV products. Sanand EHV capacity (₹1,300 crore out of ₹6,000 crore total) to commission by March 2027 with a 152-meter tower. Management pegs EHV market opportunity at >₹3,000 crore, with Universal Cables and imports as competition.
EPC: Revenue declined to ₹43 crore (vs ₹61 crore), of which EHV-EPC execution contributed ₹18 crore; focused on selective execution.
Stainless Steel Wire: Flat growth at ₹53 crore; 91% capacity utilization; niche stable business.
Company-Specific & Strategic Commentary
Sanand Greenfield Expansion: Cumulative capex of ₹1,722 crore spent (total project ₹2,000 crore); Phase 1 (LV/MV power cable) operational at ~50% utilization, E-beam cable commissioned in Q2, EHV facility (152m tower) targeted for March 2027 commissioning. FY27 revenue contribution guided at ₹1,500-2,000 crore (correcting a media slip mentioning ₹3,000 crore); FY28 utilization target 70-75% implying ~₹4,000 crore revenue. With balancing equipment, facility can reach ₹6,000-7,000 crore turnover within two years.
New Salarpur/Bhiwadi CapEx: Announced ₹700 crore capex for a new LV/MV power cable facility at Salarpur (Bhiwadi), with construction over next two years; FY27 allocation of ₹300-350 crore. Annual capex run-rate guided at ₹600-700 crore for next 3-4 years to sustain 20%+ CAGR.
Capital Allocation Discipline: Management explicitly declined to chase industry growth of 30-35%, citing need to fund both working capital and capex systematically. Company is debt-free; metal payables days reduced from 3.5 months to <1.5 months (buying on cash). ROCE currently 23-24% (would be ~28% if creditor-funded, deliberately avoided). QIP of ₹2,000 crore raised Nov 2024; ₹1,785 crore utilized.
Brand & Retail Push: B2C contribution increased from 51% to 59% via IPL advertising and dealer expansion; intentional shift toward lower working capital-intensive retail channel.
Production Mix & Margin Trajectory: Management confirms crossing the 11% operating margin hurdle; guided range of 11-12% operating margin for FY27 with quarterly fluctuations of 0.5%.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth (FY27) | >25% value growth (confident); conservative public guidance 20%+ | Demand strong across domestic and export; management deliberately stays conservative on guidance |
| Operating Margin (FY27) | 11-12% | Hurdle of 11% crossed; mix of EHV, retail, export and expenditure ratio |
| Export Share (FY27) | 17-18% of sales | Middle East and US disruptions resolved; shipment resumption at higher freight cost |
| Sanand Contribution (FY27) | ₹1,500-2,000 crore revenue | Phase 1 at 50% utilization, ramping monthly; greenfield ramp-up takes time |
| Sanand Utilization (FY28) | 70-75% (~₹4,000 crore) | Post EHV commissioning by March 2027; full capacity ₹6,000 crore + balancing ₹1,000 crore |
| Capex (FY27-FY30) | ₹600-700 crore annually | ₹300 crore remaining Sanand; ₹300-350 crore Salarpur; balance for new locations |
| Growth CAGR (Next 2-3 Years) | >20% | Backed by capacity additions across segments; not targeting 30%+ growth |
| Debt / Leverage | Debt-free maintained | Cash purchases of metal; disciplined capital allocation |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical Disruptions | Middle East conflict (Iran war) halted shipments in Q1, US customs duties impacted exports. Management mitigated via geographic diversification across US, Australia, Middle East, Africa; shipments resumed but at higher freight cost. Residual risk of further escalation or new US trade actions. |
| Greenfield Ramp-Up Execution | Sanand ramp-up slower than initially anticipated; management slipped on media guidance (₹3,000 crore → ₹1,500-2,000 crore actual). Manpower, machinery stabilization, and environmental factors are cited constraints. EHV commissioning slip (March 2027) could delay capacity. |
| Working Capital & Growth Trade-off | Management deliberately restricts growth to 20%+ (vs industry 30-35%) to manage capital allocation; risk of losing market share to aggressive peers if growth accelerates unexpectedly, though management cites 15-year track record of consistent execution. |
| Copper Price Volatility | Revenue is value-linked to copper; price declines could compress value growth despite stable volumes. Management notes government capex budgets (₹11 lakh crore) are value-fixed, providing a demand floor. |
| Competitive Capacity Additions | Industry-wide capacity expansion; management downplays near-term overcapacity risk given 3-4 year lead times for greenfield projects and ramp-up timelines. |
| RoCE Dilution | Current ROCE at 23-24% (vs historical ~28% potential) due to heavy capex cycle; management expects recovery as new capacities contribute from FY28 onwards. |
Q&A Highlights
Margin Expansion Drivers
- Question: Operating margin jumped sequentially to 13.6% in wires & cables despite flat OpEx and aggressive retail push; what drove this? (Natasha Jain, PhillipCapital)
- Answer: Fixed expenditure does not grow proportionally with incremental sales; product mix change (EHV, retail) and high-margin export orders contributed. "We have crossed the hurdle" of 11% and will operate in 11-12% range going forward. (Rajeev Gupta)
- Follow-up: Are export margins now structurally higher? (Natasha Jain)
- Answer: Strong global demand allows better export pricing; retail share rose from 51% to 59%, all reflected in P&L. (Rajeev Gupta)
Sanand Revenue Guidance Slip & Ramp-Up
- Question: Media interactions suggested ₹3,000 crore revenue from Sanand in FY27; is that accurate? (Praveen Sahay, PL Capital)
- Answer: "It was a little bit of a slip of tongue." Expected ₹1,500-2,000 crore revenue from Sanand in FY27, with month-on-month production increases. (Anil Gupta)
- Follow-up: Sanand product mix and phase-2 allocation? (Raman KV, Sequent Investments)
- Answer: Phase 1 is LV/MV power cable; e-beam cable operational in Q2; EHV cable with 152m tower commissioned by March 2027. Total project cost ₹2,000 crore; FY28 utilization target 70-75% (~₹4,000 crore). (Rajeev Gupta)
EHV Margins & Market Opportunity
- Question: What are EHV margins vs LV/MV, and what's the revenue potential? (Raman KV, Sequent Investments)
- Answer: EHV operating margin ~15% vs 10.5% (institution LV/MV), 11% (retail), >11% (export). Sanand EHV capacity ₹1,300 crore; market opportunity >₹3,000 crore with Universal Cables and imports as competitors. (Rajeev Gupta)
Growth Restraint & Capital Discipline
- Question: Why not grow at industry rate of 30-35% given strong demand? (Umang Mehta, Kotak)
- Answer: Need capital for both working capital and capex; debt-free company with disciplined allocation. "We are conservative people; whatever we say, we try to deliver more." (Rajeev Gupta)
- Follow-up: What exactly constrains faster growth? (Akshen Thakkar, Fidelity)
- Answer: Greenfield ramp-up takes time (manpower, machinery stabilization), and capital allocation discipline will not be compromised. Actual growth will be >25% but guidance stays conservative. (Anil Gupta)
Export Recovery Path
- Question: Q1 exports down 7-8%; how to reach 17-18% export share implying 30-40% growth in remaining 9 months? (Shirom Kapur, Jefferies)
- Answer: Middle East shipments stalled in Q1 but have resumed at higher shipping cost; US market reopened. Confidence based on order book (₹822 crore export pending) and market conditions. (Anil Gupta)
- Confirm export target: 17-18% of FY27 sales (vs 16% in FY26). (Rajeev Gupta)
Value vs Volume Growth Disconnect
- Question: Industry revenue growth (25-35%) seems to outpace volume; how should analysts view this? (Pulkit Patni, Goldman Sachs)
- Answer: Government capex budgets (₹11 lakh crore central + ₹6 lakh crore state) are allocated in value terms, not volume. Demand from infrastructure, transmission, railways is value-linked; copper price movements don't change budget allocations. (Rajeev Gupta)
Risk Mitigation & Balance Sheet Strength
- Question: What concerns you most—external or internal risks? (Bharat C. Shah, BCS Capital)
- Answer: Mitigated geopolitical risk via diversification across geographies and customer segments; debt-free balance sheet insulates from market shocks. Internally, capital allocation discipline is paramount—metal purchased on cash basis (creditor days <1.5 months), deliberately avoiding leverage that would boost ROCE from 23-24% to ~28%. (Anil Gupta, Rajeev Gupta)
Other Income Decline & QIP Deployment
- Question: What explains drop in other income from ~₹40 crore to ~₹14.6 crore? (Shirom Kapur, Jefferies)
- Answer: Last year's other income was elevated due to interest on QIP FDRs; as QIP funds deploy into capex, interest income normalizes. (Rajeev Gupta)
Key Takeaway
KEI Industries delivered a strong Q1 FY27 with net sales of ₹3,185 crore (+23% YoY), operating margin expansion to 12.43% (crossing the 11% hurdle), EBITDA up 39.5% to ₹415 crore, and PAT up 40% to ₹274 crore—driven by EHV growth (+47%), retail/dealer share rising to 59%, and operating leverage. Domestic wire & cable grew 29%, while exports declined 9.1% on Middle East conflict and US tariffs; management guides export share to 17-18% of FY27 sales. Strategy centers on Sanand ramp-up (₹6,000-7,000 crore potential capacity; ₹1,500-2,000 crore revenue in FY27, 70-75% utilization in FY28), a new ₹700 crore Salarpur facility, annual capex of ₹600-700 crore, and disciplined 20%+ CAGR growth while remaining debt-free with ROCE at 23-24%. Management maintains conservative guidance despite expecting >25% value growth. Key watchpoints include greenfield execution (EHV commissioning by March 2027), geopolitical supply chain risks, and capacity addition timelines across the industry.