KEI Industries Ltd (KEI) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the KEI Industries Q2 FY27 earnings conference call hosted by Nuvama Institutional Equities. As a reminder, all participant lines
Moderator: in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aanchal Lohade from Nuvama Institutional Equities. Thank you, and over to you, sir.
Achal Lohade (Nuvama Institutional Equities): Yes, thank you. Good afternoon, everyone. On behalf of Nuvama Institutional Equities, we are glad to host senior management of KEI Industries Limited to discuss the Q2 earnings. We have with us Mr. Anil Gupta, Chairman cum Managing Director of the company, Mr. Rajeev Gupta, Executive Director of Finance and CFO. We'll start the call with the opening remarks from the management and then move to Q&A session. Thank you, and over to you, sir.
Anil Gupta (KEI Industries Ltd): Thank you very much. I'm Anil Gupta, CMD, KEI Industries Limited. Thank you for attending this conference call. I will give a brief of quarter two of '26-'27 financial year. So net sales in QT Q2 of FY '27 is 3,776 crore. So we have achieved a growth by 38.52%. However, the total wire and cable sales in Q2 have grown by 39.5% against previous year's same period. During Q2 FY '26-'27, operating margin is almost at par at 9.97% against 9.88% previous year's same period. EBITDA in this quarter is 401 crore against 311 crore last year which margin EBITDA margin over net sales was 10.62% in in this quarter. The growth in EBITDA is 28.69%. Profit after this tax this quarter is 262.45 crore against 203.51 crore last year. Growth in the PAT is 28.96%. Profit after tax / net sales margin is 6.95% versus 7.46% previous year same period. Domestic wire and cable sale is 3,184 crore with a growth of 46%. Export sale in this quarter is 493 crore against 472 crore last year. We have very good order book position from overseas market, particularly United States. So we are quite hopeful that in coming quarters export will grow substantially. Total EHV sales this quarter is 217 crore against 172 crore in the previous period last year. EPC sales is 46 crore against 47 crore. Stainless steel wire sales is 50 61 crore against 53 crore previous year's same period. Domestic institutional wire and cable contribution is that means B2B sale is 26% contribution in the overall sale. Sale through B2C sale against distribution network is 59%, and contribution of export is 13%, and balance 2% is domestic EPC and domestic stainless steel wire. For first half of 6 months in FY '27, net sales achieved is 6,961 crore. So the growth in H1 is almost 31%, but however total wire and cable sale growth is 32. 32% against previous year's same period. Now, during H1, operating margin has improved to 11.09% and EBITDA achieved is 11.73% against 11.46% in the same period previous year. Growth in EBITDA in first half is 34%. Profit after tax is 536.59 crore. Growth in the PAT is 34.4%. Domestic wire and cable sales total growth in domestic wire and cable growth is 38%. Export sales is 8
Anil Gupta (KEI Industries Ltd): 4 crore. After, as against 846 crore last year. Total sale of extra high voltage cable is 403 crore as against 298 crore last year. The total active working dealers of the company as on 30th September is 2,146. Total order book at at the moment in wire and cable segment is 4,927 crore, EPC 258 crore, and out of this total order book around 991 crores are export order. External rating, long-term rating from Care, India Ratings and ICRA is AA+ and that of short term is A1+. Book value of the company per equity share is 753 as against 697 as on March 31, 2026. Cash and bank balances on 30th September is 298 crore, which includes QIP balance of Rs 169 crore. During H1 FY26-27, company has incurred a capital expenditure and capex payment of Rs. 402 crore out of which Sanand capex is 333 crore. Till 30th September '26, total capex payment incurred for Sanand is 18, 1,876 crore. Another Rs 200 crore approximately will be spent in balance six months of FY26-27. Company is expected to incur capital expenditure of approximately 600 crore annually for next three to four years. At present company's having total metal metal consume metal consuming capacity of approximately 1,83,000 metric ton per annum including both copper and aluminum both. The planned commercial production of phase 2 of extra high voltage cable and HT cable in Sanand will commence by end of end of March '27. Capacity utilized during H1 '27 is approximately 77% in cable division, 64% in house wire division, 91% in stainless steel wire division and 43% in the communication cable capacity. Sanand capacity addition is taking time to ramp up and and in coming months, capacity utilization will increase month after month. Also, we have sufficient capacity to grow house wires say, production and sales for next two to three years. Now, based on the strong demand in domestic and overseas market, we are hopeful to grow in the current year by more than 25% and in next three to four years by 20% CAGR. There is a good demand in both and demand growth in, of our wires and cables in data centers, power T&D, renewable energy like solar and wind, and also even the thermal power projects now coming up in a big way. Electric vehicles, infrastructure, railway electrification, metros, urban infrastructure as well. Also manufacturing new manufacturing projects in domestic as well as in global markets are also attracting good demand. Wire demand is strong in housing and commercial spaces. Thank you very much. This is a brief from my side. I would you know, would like would like to Glad to answer your any queries if you have. Thank you very much.
Moderator: Thank you, sir. We will now begin with a question and answer session. Anyone who wishes to ask a question may press star and then one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all the participants, you may press star and one to ask a question.
Moderator: We have the first question from the line of Natasha Jain from PhillipCapital. Please go ahead.
Natasha Jain (PhillipCapital): Thank you. Good afternoon, team. I have two questions. First, on gross margin, could you explain the YoY gross margin decline? Now what I understand is EPC losses if I take that even as a percentage of gross profit that explains 80 bps decline, leaving another 100 bps. Your commentary on export is bullish. EHV's grown very strongly. B2C growth has been strong and today morning interview on CNBC also I mean the MD said that UltraVolt's entry will not trigger price war. And in 1Q, you had said that we will maintain the gross margin guidance with a further 50 bps improvement. So could you please categorically explain the 100 bps decline? And second question is on the wires and cables outlook. So if we see copper has been oscillating close to almost 14,800. So how do you see this wire and cable market evolving if copper crosses the 15,000 mark? Could there be a dent in demand itself and what are the key risks that you see standing today in the wire and cable market? Thank you.
Rajeev Gupta (KEI Industries Ltd): Yeah, thank you, Natasha. I'm Rajeev Gupta. So, first of all, Natasha, as earlier, in the earlier call of the first quarter, we maintained that the overall EBITDA margin will be 11% mainly because the quarter 1 was not the representative of the margin because of the certain valuation of inventory. So, if the valuation increase in the first quarter because of some reason, it has to effect in the other subsequent quarter. So, because of that, it looked like that. But if we compare the the whole half-year position, you will find the same thing which we have said earlier also. And in the past, if you compare our 5 years number, our operating margin was close to 10.27% to 11% in H1. So slowly slowly it is increasing and it has reached to 11% now in H1. So we should not compare, as we have been requested, for Q1 or Q2. It is an annualized basis. We always guided in the past that annualized basis the margin will be there because the growth is also on annualized basis because in Q1 or Q2 or Q3, growth may here and there because of certain dispatches or certain inspections get delayed. So because of that year-after-year and quarter-after-quarter we always guided that the growth rate will be for the full year and the margin will also be for the full year basis because of the valuation impact and everything else. With respect to the the wire and cable market demand, since last 15-17 years, in spite of so many new competitors came in in last 15-20 years, company has grown almost 17%. If we talk of the last 3 years, we have growth, we have grown more than 18%-19%. So, that kind of history we are maintaining and we are communicating, and we are guiding. So, whatever we are guiding in terms of the growth or in terms of the margin, keeping in mind the new competition, keeping in mind the geopolitical situation, everything we keep in mind, that's why we give you the guidance. So, whatever guidance this year, we have upgraded to grow by 25%. So, we are still maintaining that we will grow more than 25%. Because nobody knows in future copper price will go up or copper price will go down. So, whatever conditions at present are available, whether it's a pricing or it's a geopolitical situation or some other environmental or some other political situation, we need to consider each and every thing into the aspects. That's how we are guiding. So, our guidance is still maintaining that we will be growing at a 25% plus growth rate and our EBITDA margin will be close to 11%. In our EBITDA, mainly other income part is very small. It is not more than it is basically the interest on our FD or some exchange gain or loss. It depend on a quarter-to-quarter. It is not very heavy amount. If we exclude the interest or exchange gain or loss, then another 0.3% or 0.4% we may exclude. So, whatever Anil ji is saying that we will be maintaining 11% EBITDA margin, in in in the past also we were saying. In the last quarter, we maintained that 11% to 12% guidance. So, that was a range-bound guidance because of the Sanand. Once that Sanand is fixed and the capacity is ramping up and we are going to utilize to 60% to 70%, our EBITDA margin will definitely cross to 11%.
Rajeev Gupta (KEI Industries Ltd): That's how we are, we have guided and still we are firm on our guidance, whether the competition was there or the competition in future will be there. Export is increasing robust way and in the coming quarter the export will also grow. But our growth rate will be depending on the geopolitical situation, competition as we repeatedly saying that will be 25% plus and EBITDA margin will be 11% whether we will grow from export or we will grow from the dealer-distributor or we will grow from the domestic institutional side. As of now the pending order position is very very strong. Export order is also very very strong, so demand has very very strong and the visibility of the demand is also very strong. Yes, Natasha, from my side is over. If you have any query, please let me know.
Natasha Jain (PhillipCapital): Thank you, sir. That's comprehensive. Thank you very much and all the best.
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