RRKABEL - R R KABEL LIMITED Share Price

In the Q4 FY26 earnings conference call, management expressed optimism about R R Kabel Limited's performance, noting its highest-ever quarterly and annual revenue figures. For Q4, revenue was reported at INR 2,964.1 crores, a 33.7% year-on-year growth, while the full-year revenue reached INR 9,722.4 crores, reflecting a 27.6% increase. EBITDA for Q4 stood at INR 263.5 crores, up 34.6%, and PAT increased to INR 168 crores, marking a 30.1% growth.

The management outlined key forward-looking points, including the following targets and strategies:

1. The company set a 3-year roadmap under "˜Project RRise,' targeting an 18% CAGR growth in Wires & Cables and a 25% CAGR in FMEG, aiming for a cumulative 2.5x EBITDA growth.
2. Expectations for volume growth in wires and cables are projected between 16% to 18% CAGR through FY28.
3. For the FMEG segment, management anticipates achieving a 20-25% growth in FY27, attributing this to increases in demand and improved product distribution.
4. Plans to optimize both product mix and operational efficiency to improve margins. Current margins are targeted to expand by 100 basis points by FY28, aiming for 10.5% margin in the Wires and Cables segment.
5. The FY26 dividend is approved at INR 9.50 per share, reflecting the company's commitment to return value to shareholders.

Overall, the management remains positive on sustaining performance, balancing growth objectives against a backdrop of market uncertainties and commodity price volatility.

1. Question: "Just wanted to understand, we have definitely clocked strong revenue growth in a difficult business environment. If you can throw some light like how the quarter planned out, especially on the exports business?"

   Answer: The quarter exhibited typical higher volumes, especially in Q4. We achieved robust growth due to our initiatives to enhance volume growth. Moving forward, we're optimistic about maintaining this positive trajectory, despite potential short-term impacts from export disturbances related to the ongoing war.

2. Question: "Should we expect probably high single digit to low double digit volume growth to continue in the coming quarters as well?"

   Answer: While predicting quarter-to-quarter can be challenging, we're targeting annual volume growth to exceed the industry average, projected at around 16% to 18%, which reflects our optimism for sustained performance.

3. Question: "On the margin side, we have been aspiring to improve margins by roughly around 100 basis points on a YoY basis. Is that 100 basis points of margin expansion still on track?"

   Answer: Yes, we aim for a 300 basis points improvement in wire and cable margins by FY28. We have already achieved about 130 basis points, and I'm confident we can reach our target of 10.5% EBIT margins in the segment by FY28.

4. Question: "What was the contribution of the exports from the Middle East region in FY26?"

   Answer: Exports accounted for approximately 30% of our total wire and cable business, with around 40% from the Middle East, translating to about 12% of our overall top line. We anticipate rebounds once the regional crisis ebbs.

5. Question: "How has been the demand for domestic in March?"

   Answer: Overall, March showed good growth without significant destocking observed in the domestic market. The prevailing macroeconomic environment didn't drastically affect our performance, maintaining normal demand levels.

6. Question: "What is the outlook for exports, especially in the Middle Eastern region for FY27?"

   Answer: It's tough to forecast due to the unpredictability of the current conflict. However, we anticipate that once the situation stabilizes, we can regain significant sales momentum in that region.

7. Question: "Is there any inventory gain in the fourth quarter?"

   Answer: Yes, there was some positive impact on profitability from inventory, but I can't quantify it specifically. This is typical in our regular business operations.

8. Question: "What will be the capex plan for FY27?"

   Answer: We're on track with our Rs.1,200 crore capex plan, having already invested about Rs.300 crore in FY26. We expect significant investments in FY27 to drive expansion and enhance our capacity.

9. Question: "What is the expected revenue growth for FMEG given FY26 was weak?"

   Answer: We anticipate around 20%-25% growth for FMEG in FY27. While FY26 wasn't ideal, we are targeting growth that is at par or better than industry averages.

10. Question: "What is the contribution of cables in the overall sales mix?"

    Answer: Currently, our mix stands at 73% wire and 27% cable. With our planned capacity expansions, we expect this percentage to shift positively toward cables, increasing our revenue share from higher-value products over the next few years.