RRKABEL - R R KABEL LIMITED Share Price

In the Q1 FY26 earnings call for R R Kabel Limited, management presented a positive outlook, indicating a strong start to the fiscal year marked by broad-based growth. Revenue from operations was reported at INR 2,058.6 crores, representing a 13.9% year-on-year increase from INR 1,808.1 crores in Q1 FY25. EBITDA rose to INR 143.1 crores, up 50% from INR 95.4 crores, with an EBITDA margin expansion to 7% from 5.3%. Profit after tax reached INR 89.8 crores, a 39.4% growth from INR 64.4 crores.

Management highlighted several forward-looking points:

1. Volume Growth Guidance: Management maintained a volume growth guidance of 18% for FY26, with an expected improvement in margins by 100 basis points.

2. FMEG Segment: The FMEG segment aims for a 20-25% growth, targeting profitability improvement. Despite previous losses, Q1 saw a narrowing of losses to INR 7.1 crores from INR 20.7 crores.

3. Market Positioning: The company is confident about capturing growth in the wires and cables sector, which is projected to outpace GDP growth, driven by government initiatives around electrification and infrastructure.

4. Production Capacity: A capex of INR 1,200 crores is planned over three years, with expectations to double cable capacity by the end of this year.

5. International Expansion: The export market is seeing significant growth, and management is positive about expanding its presence, particularly in Europe and the Middle East.

6. Product Mix Improvement: An ongoing strategy focuses on enhancing the product mix towards higher-margin products, especially in the cables segment, to boost overall margins.

In summary, R R Kabel Limited is poised for sustained growth, leveraging favorable market conditions, strategic expansion, and operational efficiencies.

Q&A Section of the Earnings Conference Call (1 August 2025)

1. Question from Vidit Trivedi: "Could you please give me a breakup of the volumes growth between wires and cables? And was the margin expansion due to pricing strategy or product mix?"

Answer: Our overall volume growth stands at 6.5%. Specifically, wires grew by approximately 10%, while cables saw a growth of 2%. The margin improvement is primarily due to a deliberate shift in our product mix towards higher profit products, aligning with our planning and budgeted figures.

2. Question from Praveen Sahay: "Would you continue with the guidance of 18% volume growth and 100 basis points margin improvement for FY '26?"

Answer: Yes, our guidance of 18% volume growth and a 100 basis points margin improvement is intact. We've already seen a 40 basis points margin improvement, and we expect a strong H2 based on our expansion and demand scenarios.

3. Question from Dhruv Jain: "In this quarter you saw about just 2% volume growth in cables; could you quantify the impact from spillover?"

Answer: The low growth in cables was influenced by a weaker April and delays in large projects expected to deliver in Q2. Overall, we're on track with our growth plans, targeting around 25% growth in our cable business.

4. Question from Nattasha Jain: "Could you clarify the tariff situation on copper and how it impacts competitiveness?"

Answer: Currently, there is a 25% general tariff and a 50% customs duty on copper products, including wires and cables. If this tariff continues, it may impact our market viability, but we have plans to diversify into aluminium cables and maintain broad market exposure.

5. Question from Rahul Agarwal: "How have the markets behaved for domestic wires, particularly during the quarter?"

Answer: Overall, we experienced reasonable growth in the domestic wire segment. While we see strong demand in North and West India, we're also expanding into South and East markets, though growth from them remains modest due to smaller bases.

6. Question from Raman KV: "Can we expect margin pressures with current rising copper prices?"

Answer: No, we have a mechanism to manage price fluctuations and can pass them onto consumers. We regularly monitor raw material price trends and adjust accordingly.

7. Question from Mehul Mehta: "What is the current capacity utilization for cable and wire segments?"

Answer: Currently, our wire capacity utilization is around 70%, while cable is at approximately 92-95%. This reflects our continuous improvement and growth strategies.

8. Question from Balasubramanian: "What strategies are you implementing to enhance FMEG profitability?"

Answer: We've improved product mix and reduced losses significantly by focusing on premium products, which now account for about 20% of our revenue. Continued scale and better pricing strategies are driving growth and profitability.

9. Question from Nikhil Purohit: "What is your full year guidance for capex this year?"

Answer: We are guiding for a capex of around INR 300 crores for this year, focusing on capacity expansions and operational improvements.

Each response provides insights into specific operational metrics and future expectations, aligning with the company's strategic objectives.