R R Kabel Limited Q1 FY27 Earnings Call Summary

Revenue

Margin

Demand

Guidance

Tone

Event Participants

Executives

3 Jigar Mehta, Rajesh Jain, Rajesh Kabra

Analysts

13 Achal Lohade, Dhruv Jain, Himanshu Singh, Natasha Jain, Nikhil Purohit, Rahul Agarwal, Sahil Sharma, Sandesh Shetty, Tisha, Umang Mehta, Vidit Trivedi, Vivek Gupta, Yash Mehta

Financials & KPIs

Metric	Reported	Commentary
Revenue from Operations	₹3,168 crore	Highest-ever quarterly revenue; up ~54% YoY (vs ~₹2,057 crore in Q1 FY26), driven by strong wires & cables demand and pricing.
Operating EBITDA	₹285 crore	Nearly doubled YoY (₹143 crore); margin expanded to 9.0% from 7.0% on scale benefits, product mix, and cost absorption.
Profit After Tax	₹205 crore	Up from ₹90 crore YoY; includes ₹14 crore exceptional gain from reversal of labor code provision.
Wires & Cables Revenue	₹2,880 crore	+57% YoY; volumes +17% (cables >25%, wires ~12%). Domestic and export growth broadly similar.
W&C Segment Profit / Margin	₹285 crore / 9.9%	Profit doubled from ₹139 crore; margin up 230 bps YoY (7.6% → 9.9%) on improved mix, commodity management, and operating leverage.
FMEG Revenue	₹288 crore	+28% YoY; lights, appliances, and switches led growth. Fans volumes flat, but realizations improved on premium mix.
FMEG Segment Profit	Operating breakeven	Improved from a loss of ~₹7 crore in Q1 FY26 and ~₹9 crore in Q4 FY26; driven by premium products and operating leverage.
Net Working Capital Days	50 days	Broadly stable; receivable days reduced by 3 days in the quarter. No stress in trade payments.
Capex Plan (FY26-FY28)	₹1,200 crore total	~₹300 crore spent in FY26; ₹600–650 crore planned for FY27, largely toward cable capacity.
Retail Touchpoints	>1.5 lakh	Added ~20,000–25,000 retail points last year; dealer network in consolidation phase to deepen penetration.

Geographic & Segment Commentary

Wires & Cables: Delivered 17% volume growth with cables growing faster (>25%) than wires (~12%). Revenue rose 57% YoY to ₹2,880 crore; segment margin expanded to 9.9% from 7.6% on scale, product mix, and efficient commodity management. Growth was broad-based across domestic and export markets, with B2B, project, industrial, and power cables as key focus areas. Capacity utilization: cables ~90%, wires ~65–70%.
FMEG: Revenue grew 28% YoY to ₹288 crore, reaching operational breakeven (vs ₹7 crore loss a year ago). Lights, appliances, and switches drove growth; fans revenue rose on better premium mix despite flat volumes. Premium products now contribute ~25% of FMEG revenue. One-third of manufacturing is in-house (fans, switchgear, commercial lighting), with the rest outsourced; model expected to continue.
Domestic vs Exports: Both markets grew at a similar pace (~57% revenue growth overall). Middle East disruption in early Q1 was offset by gains in other geographies; shipments normalized in May–June. Europe and Middle East are the largest export markets; U.S. is seen as a future opportunity pending tariff clarity.
Regional (India): North and West contribute ~65% of domestic revenues; South is improving, while East remains underpenetrated. Retail touchpoints exceed 1.5 lakh, with ~20,000–25,000 added annually; dealer count is being consolidated for greater depth and higher revenue per dealer.

Company-Specific & Strategic Commentary

Project RISE: Long-term execution program announced last year; Q1 performance is aligned with its targets. Priorities remain growing ahead of the industry in wires & cables, strengthening cable/B2B positions, and making FMEG consistently profitable.
Capacity Expansion: ₹1,200 crore capex plan (FY26–FY28) on track; ~80% allocated to cables. New wire capacity at Silvassa expected in Q2 FY27, and cable capacity at Waghodia later in the year. Expansion supports the ~18% volume growth target.
B2B & Cable Strategy: Focus on power cables, including high-voltage (HV) segments where presence is still low, and on specialized cable applications. Data centers are an early-stage opportunity—few orders received, with most demand still in announcement/bidding phase.
FMEG Turnaround: Breakeven achieved via premiumization, selective product launches, distribution expansion, and cost control. Target is sustainable breakeven in FY27 and ~20% annual revenue growth, with profitability building over the next 2–3 years.
Export Diversification: Geographically diversified portfolio helped offset Middle East disruption. New approvals and geographies are being added; U.S. tariff clarity is awaited before scaling meaningfully.

Guidance & Outlook

Metric	Guidance / Outlook	Commentary
Volume Growth (FY27)	~18% YoY	Reiterated guidance set at the beginning of FY26; H2 historically stronger than H1.
Wires & Cables Segment Margin	10.5% by FY28	Management maintained guidance despite Q1 at 9.9%; full-year double-digit not committed so early in the year.
EBITDA Margin Improvement	Minimum 100 bps YoY	Confident of achieving original business plan; Q1 margin at 9.0% (up 200 bps YoY) provides a strong start.
FMEG	Sustainable breakeven in FY27; ~20% revenue growth	Q1 was the first breakeven quarter; Q2 may be seasonally softer, but yearly breakeven is expected, with profitability to build over 2–3 years.
Capex (FY27)	₹600–650 crore	Major phase of the ₹1,200 crore plan; predominantly toward cable capacity.
Export Recovery	Middle East normalization in Q2	Shipments normalized in May–June; supply chain issues remain but are expected to be overcome.

Risks & Constraints

Risk	Context
Metal Price & FX Volatility	Copper/aluminum price swings and USD movements can affect pricing, margins, and working capital. Management noted a slight negative volume impact from destocking at quarter-end as commodity prices corrected.
Middle East Supply Chain Disruption	Early Q1 disruption was offset by other export markets, but supply chain issues persist. Management is confident of recovery, though geopolitical uncertainty remains.
U.S. Tariff Uncertainty	The U.S. is seen as a large growth opportunity, but tariff clarity and customer onboarding are pending. Meaningful scaling could be delayed until conditions stabilize.
FMEG Seasonality	Q2 is seasonally weaker for FMEG; quarterly breakeven may not sustain, though yearly breakeven is expected. Sustained profitability depends on premium mix and cost control.
Competitive Intensity	New entrants and aggressive bidding in institutional/project business are possible; management sees no unusual pressure currently but remains watchful.

Q&A Highlights

Cable Growth, Margins & Guidance

Question: Where is the cable market share gain coming from—distribution or B2B—and how sustainable are the margins? (Dhruv Jain, Ambit Capital)
Answer: Growth is coming from a deliberate focus on B2B, project, industrial, and power cables. Margin improvement is driven by scale and better product mix. Management maintained the FY28 W&C segment margin guidance of 10.5%, aiming for double-digit this year but not committing early. (Management)
Question: What is the industry growth estimate and the volume growth outlook? (Achal Lohade, Nuvama; Dhruv Jain, Ambit Capital)
Answer: Industry growth is estimated at 10–12%. The company expects ~18% volume growth in FY27, with H2 historically stronger than H1; cables are expected to outpace wires on infrastructure, green energy, and data center demand. (Management)

Exports, Middle East & U.S. Opportunity

Question: How did exports perform despite Middle East disruption, and what is the geographic mix? (Achal Lohade, Nuvama; Nikhil Purohit, Fident Asset Management; Sandesh Shetty, HSBC)
Answer: Exports grew roughly in line with domestic business (~57% revenue growth) due to geographic diversification; the Middle East disruption was offset by other markets, and shipments normalized in May–June. Europe and Middle East are the largest export regions. (Management)
Question: What is the U.S. opportunity, and what is needed to scale meaningfully? (Vidit Trivedi, Asian Market Securities)
Answer: U.S. is a large future opportunity. The company has some approvals and is onboarding customers, but tariffs remain unclear, so scaling will depend on clarity. Current contribution is negligible. (Management)

Pricing, Margins & Working Capital

Question: Can you break down the margin expansion between mix, operating leverage, and commodity gains? (Umang Mehta, Kotak Securities; Yash Mehta, SKP Capital)
Answer: Scale benefits and better cost absorption are the largest contributors, alongside product mix and procurement discipline. Q1 margin was purely organic with no inventory gains/losses. Management is confident of at least 100 bps YoY EBITDA margin improvement. (Management)
Question: What is the pricing impact of LME increases, and how is channel inventory? (Umang Mehta, Kotak Securities)
Answer: With LME up ~30–40% YoY, product pricing could reflect ~25% increase in Q2 if prices stay flat. There was a slight negative volume impact from destocking at quarter-end; over the long term, consumption remains stable. (Management)
Question: Any stress in trade receivables? (Natasha Jain, PhillipCapital)
Answer: No stress; receivable days reduced by 3 days in the quarter. (Management)

Capacity Expansion & Capex

Question: What capacities are coming on stream, and what is utilization? (Rahul Agarwal, Ikigai Asset; Dhruv Jain, Ambit Capital)
Answer: Silvassa wire capacity will be added in Q2 FY27; Waghodia cable capacity later this year. Capex plan is ₹1,200 crore through FY28, with ₹600–650 crore in FY27, ~80% toward cables. Wires utilization is 65–70%; cables ~90%. (Management)
Question: What new products/industries will the new capacity target? (Rahul Agarwal, Ikigai Asset)
Answer: Focus is on HV power cables and specialized cable industries where the company’s presence is still low, while maintaining strong LV cable positioning. (Management)

FMEG Transformation

Question: Why did the breakeven timeline slip, and what is the outlook? (Tisha, TriNetra Asset Management)
Answer: Raw material inflation delayed the Q4 FY26 target. Q1 FY27 achieved operational breakeven; sustainable yearly breakeven is expected in FY27, though Q2 may be seasonally softer. Premium mix (~25% of revenue) and operating leverage are key drivers. (Management)
Question: What is the FMEG manufacturing model, and will it change? (Rahul Agarwal, Ikigai Asset)
Answer: One-third of manufacturing is in-house (ceiling fans, switchgear, commercial lighting), with two-thirds outsourced. The model will continue, with focus on R&D and brand building. Appliances contribute 10–11% of FMEG revenue (geysers, coolers, small appliances). (Management)
Question: What are the next milestones for FMEG? (Sahil Sharma, DD Capital)
Answer: Target ~20% annual top-line growth and sustainable breakeven this year, followed by consistent profitability over the next 2–3 years. (Management)

Distribution & Competitive Landscape

Question: What is the dealer/retail expansion status, and how does it compare to revenue growth? (Tisha, TriNetra Asset Management; Achal Lohade, Nuvama)
Answer: Retail touchpoints exceed 1.5 lakh, with ~20,000–25,000 added last year. Dealer count is in a consolidation phase, focusing on depth and revenue per dealer rather than raw count. (Management)
Question: Is the shift from unorganized to organized accelerating? (Himanshu Singh, Baroda BNP Paribas Mutual Fund)
Answer: The shift is a steady ~2–3% of market per year; no major acceleration seen in the last six months. (Management)

Key Takeaway

R R Kabel delivered its best-ever quarter in Q1 FY27, with revenue of ₹3,168 crore (+54% YoY), operating EBITDA of ₹285 crore (9.0% margin), and PAT of ₹205 crore, including a ₹14 crore exceptional gain. Wires & cables led growth—volumes +17% and revenue +57%—with segment margins expanding 230 bps to 9.9% on scale, mix, and cost absorption; FMEG grew 28% and reached operational breakeven. Management reaffirmed ~18% volume growth for FY27 and the 10.5% W&C margin target by FY28, backed by a ₹1,200 crore capex plan (₹600–650 crore in FY27) adding wire and cable capacity at Silvassa and Waghodia. Exports stayed resilient despite Middle East disruption, and the U.S. remains a future opportunity pending tariff clarity. Key watch points are commodity/FX volatility, FMEG seasonality, and sustaining double-digit margins while scaling cable and B2B businesses.