R R Kabel Ltd (RRKABEL) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to R R Kabel Limited Q2 and H1 FY '27 Earnings Conference Call hosted by MUFG. As a reminder, all participant lines will be 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 the 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. Chirag Bhatia from MUFG. Thank you, and over to you, Mr. Bhatia.
Chirag Bhatia (MUFG): Thank you, Renju. Good afternoon, everyone, and a warm welcome to all the participants on the Q2 and H1 FY '27 earning conference call of R R Kabel Limited. Joining us today are Mr. Mahendrakumar Kabra, Managing Director; Mr. Rajesh Kabra, Joint Managing Director; Mr. Rajesh Jain, Chief Operating Officer; and Mr. Jigar Mehta, Chief
Chirag Bhatia (MUFG): Financial Officer. Before we begin, I would like to give you a brief disclaimer. This call may contain forward-looking statements based on our current views, opinions, and expectations as of today. These statements are not the guarantees of the future performance and are subject to risks and uncertainties that could cause actual outcomes to differ materially. With this, I would like to now hand over the call to Mr. Mahendra Kabra ji for his opening remarks. Over to you, sir.
Mahendrakumar Kabra (R R Kabel Ltd): Good afternoon, everyone, and thank you for joining us for RR Kabel's Q2 FY '27 earnings call. I have with me Mr. Rajesh Kabra, our Joint Managing Director, Mr. Rajesh Jain, our Chief Operating Officer, and Mr. Jigar Mehta, our Chief Financial Officer. Let me begin with a very brief overview of the operating environment and our performance during the quarter. The broader economical environment continues to offer encouraging opportunities, supported by India's sustained focus on infrastructure development, power and electrification, housing, and industrial investments. These structural drivers continue to support the long-term growth prospects of the wire and cable industry. While global uncertainties and evolving market dynamics remain factors to watch, we believe the industry fundamentals remain strong, providing significant opportunity for organized players like RR Kabel. Against this backdrop, I'm pleased to share that RR Kabel has delivered its highest ever half yearly revenue, operating EBITDA, and profit after tax. I'm also pleased to share that our board has declared an interim dividend of ₹6.50 per equity share. Further, the board has approved an investment of ₹200 crores towards land acquisition in Rajasthan to support our future expansion plan. This decision reflects our continued focus on rewarding shareholders while investing in the long-term growth of our business. I would also like to highlight an important development during the quarter. On 25th September 2026, we entered into new business transfer agreement with Cables Limited, a wholly owned subsidiary of Usha Martin Limited, for the proposed acquisition of Cables business undertaking engaged in manufacturing and selling of optical fiber and related cables. The agreed consideration is approximately 77 crores, subject to post-closing adjustments. The transaction remains subject to fulfillment of the condition precedent and has not recognized in our results as of September 2026. And before I conclude, with Diwali just around the corner, I would like to extend my warm wishes to all of you and your families for a happy, healthy, and prosperous Diwali. With this, I now invite Mr. Rajesh Kabra to share his perspective on our business performance and outlook. Over to you, Rajesh.
Rajesh Kabra (R R Kabel Ltd): Thank you, Mahendra ji, for the opening remarks. For H1 FY '27, our consolidated revenue grew by 53% year-on-year, operating EBITDA grew by 79%, and PAT increased by 87%. We also delivered an improvement in EBITDA and PAT margins supported by higher gross profit, operating leverage, and improved cost efficiencies. Our wires and cables business continued to lead the performance with revenue growth of approximately 53% in Q2 and 55% in the first half. We saw strong revenue growth across domestic and international markets, with exports growing faster than domestic in Q2. Higher export growth reflects our strong competitive positioning in international markets, while domestic business remains a key pillar of our growth strategy. Our focus is clear to deepen market
Rajesh Kabra (R R Kabel Ltd): strengthen execution capabilities and capitalize on opportunities across infrastructure, construction and industrial segments to drive sustainable volume-led growth. The improvement in operating profitability is another encouraging aspect of our performance. For H1, wires and cables segment profit grew by around 78% with segment margin improving by approximately 124 basis points. This reflects disciplined commodity management, improved operating cost absorption and operating leverage. Turning to FMEG, we continue to build business scale. The segment delivered revenue growth of approximately 42% in Q2 and 35% in H1. Growth was seen across key categories with appliances making a particularly strong contribution including from new products. While FMEG segment reported a loss in the second quarter, the H1 segment loss margin narrowed to 2.2% from 4.5% in corresponding period last year. Our objective remains to achieve full year break even at segment profit level in FY '27. Building scale, improving cost absorption and maintaining operating discipline remains central to this effort. As we enter the second half our focus is on building upon strong performance delivered in H1. In wires and cables, we aim to sustain our growth momentum, further strengthen our international presence, and capitalize on emerging opportunities in the domestic market. In FMEG, our priority is to translate the growth scale of operations into improved profitability. Across both businesses, we remain committed to margin improvement of operational efficiencies and stronger cash generation to drive sustainable growth. On that note, I would also like to wish everyone a joyous and prosperous festive season ahead. With this, I will now hand over the call to Rajesh Jain to take to take you through our financial and operational performance in greater detail. Over to you, Rajeshji. Thank you.
Rajesh Jain (R R Kabel Ltd): Thank you, Rajeshji, and good afternoon, everyone. Let me start with our consolidated performance for the second quarter. Revenue from operations stood at ₹3,284 crores compared with ₹2,164 crores in Q2 of FY '26, representing year-on-year growth of 52%. Operating EBITDA stood at approximately 286 crores compared with ₹176 crores last year, a growth of 63%. The EBITDA margins improved to 8.7% from 8.1% in the corresponding quarter, an expansion of approximately 60 basis points. Profit before tax stood at approximately 242 crores, up 56% year-on-year. Profit after tax was approximately 181 crores compared with 116 crores last year, a growth of 55%. PAT margin stood at 5.5% compared to with 5.4% a year ago. Coming to the first half performance, consolidated revenue increased to 6,452 crores from ₹4,222 crores in H1 FY '26, representing growth of 53%. Operating EBITDA grew by 79% of approximately 571 crores compared with ₹319 crores last year. EBITDA margins expanded by around 130 basis points to 8.9% from 7.6%. Profit after tax increased to approximately ₹386 crores compared with ₹206 crores last year, a growth of 87%. PAT margin improved by improved to 6% from 4.9% in H1 FY '26. Now coming to segment performance, let me first cover wire and cable. During Q2, the segment recorded revenue of approximately ₹3,010 crores compared with ₹1,971 crores in Q1 FY '26, representing growth of 53%. Segment profit
Rajesh Jain (R R Kabel Ltd): before tax and interest, was approximately Rs. 282 crores compared with Rs. 180 crores last year, a growth of 57%. The segment profit margins improved to 9.4% from 9.2%. For H1, wire and cable revenue stood at approximately Rs. 5,893 crores growing 55% year on year. Segment profit grew by 78% to around Rs. 568 crores with segment margins expanding to 9.6% from 8.4% last year. Overall, wire and cable volumes grew by high single digit in Q2, and for H1, the volume growth stands at low teens. We remain focused on improving volumes supported by disciplined pricing, execution and cost management. Within wire and cable, the overall segment profit margin improvement was driven by higher gross profits, disciplined commodity management and operating leverage. As we move ahead, maintaining this balance between growth and profitability will remain a priority. Turning to FMEG, revenue stood at approximately Rs. 274 crores during Q2 compared with Rs. 193 crores last year, a growth of 42%. For H1, the business recorded revenue of approx. Rs. 562 crores, up 35% year on year. The growth was broad based. During Q2 revenue growth was seen across categories led by robust performance in appliances and contribution from new products. The segment reported a loss of approximately Rs. 12 crores in Q2, similar to the corresponding quarter last year. However, the segment loss margins have narrowed to 4.5% from 6.1% a year ago. For H1, the segment losses reduced to approximately Rs. 12 crores from approximately Rs. 19 crores last year. The H1 loss margins narrowed to 2.2% from 4.5%, supported by growth in scale and improved absorption of operating costs. We continue to focus on the full year objective of breakeven at the segment profit levels. Our net working capital cycle improved to 46 days as of September 26 from 49 days in March and 50 days in June. On the outlook, our priorities remain to strengthen volume growth in wires and cables, maintain operating cost efficiencies, manage working capital closely, and continue progressing towards profitability in FMEG. We remain attentive to commodity price movements and their impact on both realization and margins. Overall, we are encouraged by our H1 performance while recognizing the importance of sustainable volumes, cash conversion, and disciplined execution in the quarters ahead. With this, I would now request the moderator to open the floor for questions and answers. Thank you.
Moderator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 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. The first question comes from the line of Achal Lohade with Nuvama Institutional Equities. Please go ahead.
Achal Lohade (Nuvama Institutional Equities): Yeah, good afternoon team and thank you for the opportunity. Congratulations for the strong quarter yet again. Two questions. First, in terms of the volume growth, if you could split in terms of the wires and cables for the quarter. And also, if you could also give us some sense in terms of domestic volume growth and the exports volume growth, please?
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