KSH International Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

4 Dhruv Chopra, Amod Joshi, Nakul Pati, Rajesh Hegde

Analysts

10 Abhijay, Gaurav Bhatia, Shubham Borade, Mayank Chaturvedi, Diksha Jain, Jenish Karia, Surya Narayan Nayak, Priyanshu Jain, Rahul, Vihang Subramanian

Financials & KPIs

Geographic & Segment Commentary

Exports: Export revenue grew 76% YoY and 12% QoQ in Q1, with growth across all key geographies driven by wallet share gains and new OEM customers onboarded over the last two quarters. Middle East, Europe, and the US are the three key export geographies, each representing 8–11% of total revenue annually; quarterly geography-level splits are not disclosed. Management targets returning exports to the historical peak of ~40% of total revenue over time.

Specialized Winding Wires (CTC): Specialized wire revenue grew a record 113% YoY in Q1, with CTC contribution to total revenue reaching record levels. Higher KV classes (765kV and HVDC) represented ~25% of CTC volume, and CTC comprises 50–75% of the specialized wires segment. Management expects the elevated CTC mix to normalize over the next 2–3 quarters as Phase 2 capacity (particularly standard/EV wire lines) comes online, though absolute CTC volume is not expected to decline.

Standard Winding Wires: Standard wire revenue grew 83% YoY in Q1, similar to the 80% growth in Q4 FY26. Focus remains on select end-user industries — EVs, AC compressors, motors, and alternators for DG sets — where precision technology is critical. As Phase 2 capacity ramps up, standard wire contribution is expected to increase in H2 FY27, with new domestic clients added as Supa capacity has expanded.

Company-Specific & Strategic Commentary

Hitachi Energy Framework Agreement: KSH entered a 5-year supply framework agreement with Hitachi Energy Global covering winding wires for their Indian and certain global plants. The agreement's construct is settled, but quantities and pricing are still being finalized; management will update the market when terms are defined. This follows an industry trend where transformer OEMs with 3–4 year backlogs are seeking to lock in supply capacity.

Supa Phase 2 Expansion: 14,400 MT of the scheduled 30,000 MT expansion completed; next wave of capacity expected in Q2 FY27, with full completion by March 2027, taking installed capacity to ~59,000 MT (second largest winding wire manufacturer in India). The board authorized evaluating acquisition of an additional 10 acres in Supa MIDC for long-term expansion beyond Phase 2; the existing site can accommodate another 10,000–12,000 MT without new land.

Backward Integration: Commissioned the Upcast copper recycling facility in Chakan (last week before the call) with 5,000 MT capacity for captive copper scrap recycling. Provides modest operating efficiencies and strengthens sustainability; expected to contribute only "a few rupees" to gross profit in FY27 given commissioning timing, with scope for future expansion if benefits accrue.

Working Capital Optimization: Working capital days improved by 5 days in Q1 (following 5-day improvement in Q4) to 60 days average, from 71 days a year ago. Management targets 30–35 days as the industry-standard sweet spot, achievable over a multi-quarter (not multi-year) timeframe, ultimately supporting operating cash flow positivity even in a high-growth environment.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

EBITDA per ton sustainability and mix

• Question: How will EBITDA per ton move for the rest of the year? Has it improved for standard wires too, and how has the higher KV CTC mix shifted? (Diksha Jain, InCred Research)
• Answer: Management reiterated comfort with ~₹75,000/ton for FY27, noting Phase 2 capacity adds higher costs and mix will normalize toward standard wires in H2. Standard wire EBITDA/ton improved marginally on higher utilization. Higher KV (765kV) classes were ~25% of specialized CTC volume, up from earlier quarters. (Dhruv Chopra, Rajesh Hegde)

CTC lumpiness and full-year EBITDA guidance interpretation

• Question: Is there lumpiness in CTC orders? Does the 75,000 full-year guidance imply below-Q4 levels for the remaining 9 months? Will absolute CTC revenue decline as standard wire capacity comes up? (Gaurav Bhatia, Goldman Sachs)
• Answer: No lumpiness — it's a question of proportion; CTC's mix percentage will revert toward normal but absolute volumes will not decline. EBITDA will grow on an absolute basis for both segments. Clarified that 75,000 is a level "we are comfortable delivering," not a precise guidance number. (Dhruv Chopra)

Hitachi agreement and long-term contracts

• Question: What products does the Hitachi contract cover, what is the EBITDA/ton potential, and should we expect more OEMs to lock in supply? (Vihang Subramanian, Zaaba Capital)
• Answer: The framework agreement's broad construct is settled but quantity and price are still being finalized; updates will be provided when defined. Products covered include CTC, paper-insulated, and enamel-insulated rectangular conductors. EBITDA/ton is expected to be similar to company average, with clauses that may move it over the 5-year term. Industry-wide, given 3–4 year OEM backlogs, several OEMs are discussing similar multi-year supply agreements. (Dhruv Chopra)

Export mix and geography breakdown

• Question: Exports were 24% of revenue this quarter (vs 29% in Q1 FY26) — what's the outlook? What was the share to US and Middle East? (Shubham Borade, ICICI Securities)
• Answer: Exports were ~27% of operating revenue this quarter; the target is to return to the historical peak of ~40% over time. Quarterly geography splits are not disclosed; annually, Middle East, Europe, and US each represent 8–11% of total revenue. (Dhruv Chopra)

Industry demand cycle duration

• Question: How does the demand cycle play out over the next 3–5 years — growing incrementally each year or moderating? (Jenish Karia, Union Mutual Fund)
• Answer: Transformer OEMs have 3–5 year order books and are expanding capacity through FY29, supporting T&D volumes. Additional drivers: EV (strong 2W/3W; PV/bus meaningful from FY28–29), AC compressors, DG set alternators (data center backup), and BIS-driven localization shifting imports to Indian suppliers. EV qualification programs must be secured now for future volume. (Dhruv Chopra)

EBITDA per ton breakdown and upward trend potential

• Question: Can you quantify the breakup of the 93,000 EBITDA/ton (inventory gains, mix, operating leverage)? With HVDC and higher-value products, can margins trend above 75,000? (Jenish Karia, Union Mutual Fund)
• Answer: Management declined a full quantitative breakup; mix was the dominant driver — specifically record CTC contribution, with new OEM customers at market-driven value addition rates. Higher-value product volumes are expected to rise and should sustain or improve EBITDA, but 75,000/ton is the comfortable long-term level. (Dhruv Chopra, Rajesh Hegde)

Capacity, land, and capex phasing

• Question: What capacity is possible on the new 10-acre plot, and what is the capex for additional 12,000 MT? (Priyanshu Jain, GrowthX Infinity)
• Answer: The tonnage from the new land is undetermined — it depends on machine/product mix and is a long-term hedge for expansion needs. FY27 focus is entirely on completing Phase 2 (to 59,000 MT) and utilizing it; further capacity decisions will follow utilization build-up on the larger base. (Dhruv Chopra)

Product fungibility and future capacity allocation

• Question: Are standard and specialized capacities fungible? How do you prioritize between higher-KV T&D versus EV/wire products in a hyper-demand scenario? (Surya Narayan Nayak, Sunidhi Securities)
• Answer: Drawing (wire-drawing) capacity is fungible, but insulation lines are product-specific (CTC, EV, PEK). Future capacity additions will pivot toward segments with confirmed visibility (e.g., HVDC/765kV orders or qualified EV programs). Future expansion planning will trigger around 85% utilization on the installed base. (Rajesh Hegde, Dhruv Chopra)

Upcast recycling facility benefit

• Question: Can you quantify the benefit from the Upcast facility — will scale be raised? (Surya Narayan Nayak, Sunidhi Securities)
• Answer: The 5,000 MT facility (₹6–7 crore investment) is designed for captive scrap recycling (~less than 10% of total capacity), so the near-term benefit is modest — "a few rupees" to gross profit in FY27. Further expansion is not immediately planned. (Dhruv Chopra, Rajesh Hegde)

Copper pricing lag and borrowing costs

• Question: What is the lag between copper pricing pass-through to customers? Is borrowing cost really in double digits? (Abhijay, AJ Capital)
• Answer: Business is make-to-order; copper is booked at order receipt at the then-prevailing LME price (15–20 day production cycle), so there is no meaningful fluctuation risk per order — copper and FX are direct pass-throughs. Borrowing costs range between 6% and 9.5% across working capital products; higher interest expense in Q1 reflects higher working capital finance due to turnover growth, not a rise in cost of capital. (Rajesh Hegde, Dhruv Chopra)

EV peak insulated wires and Phase 2 progress

• Question: What is the status of peak insulated wires for EV traction motors, and what is the FY27 capex for Phase 2? (Rahul, Ambit Investment Advisors)
• Answer: The EV peak insulated wire capacity is still under installation as part of Phase 2; management will report on operationalization when complete. Phase 2 project cost is ₹150–160 crore, partly funded by IPO proceeds; most has been incurred (some in advances/`CWIP), with remaining spend through year-end expected to exceed ₹50 crore. (Dhruv Chopra, Rajesh Hegde)

Value addition growth outlook

• Question: Value addition/EBITDA per ton has grown 23% CAGR (FY23–FY26). Can we expect the same run rate going forward? What's the copper component of ~₹14 lakh/ton realization? (Rahul, Ambit Investment Advisors)
• Answer: Value addition growth mirrors the same mix dynamics as EBITDA per ton — dependent on standard vs. specialized proportion and within-segment product mix. Realization per ton is dominated by copper, which fluctuates with LME ($10,000–14,000/MT recently) and exchange rates; copper is always a pass-through, so gross profit is the more relevant metric to track. (Dhruv Chopra)

Key Takeaway

KSH International delivered a strong Q1 FY27 with revenue of ₹1,164 crore (+108% YoY), record PAT of ₹42.2 crore (+86% YoY), and EBITDA per ton of ~₹93,000 — well above the ~₹75,000 level management guides for FY27 — driven by a record CTC mix (front-loaded from Phase 1 capacity), 27% export revenue share (+76% YoY), 73.5% utilization, new OEM customers at market-driven value addition, and a weaker rupee. Volume grew 30% YoY to ~8,000 MT. Strategically, the company signed a 5-year supply framework agreement with Hitachi Energy Global (terms pending), commissioned a 5,000 MT Upcast copper recycling facility, and continues Phase 2 Supa expansion on track for ~59,000 MT by March 2027, with board authorization to evaluate an additional 10-acre land parcel for future capacity. Working capital days improved to 60 (from 71 YoY), targeting 30–35 days over time. The outlook anticipates sustained ~26% volume growth for FY27 with EBITDA per ton around ₹75,000, though management flagged near-term demand timing softness from transformer OEMs resolving facility bottlenecks and expects mix normalization as standard wire capacity ramps in H2. Watch items include Hitachi agreement finalization, Phase 2 execution, further working capital efficiency, and utilization progress toward 85% — the trigger for future capacity decisions.