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RR Kabel (RRK) is one of the leading consumer electricals players with an operating history of over 20 years in India. RRK is the 5 th largest Wires and Cables (W&C) players in India with over 7% market share (of the branded market) with a strong presence in Fast Moving Electrical Goods (FMEG), especially in Fans & Lighting. The domestic W&C industry (INR 748bn in FY23) is estimated to see 13% CAGR in FY23-27 on the back of growth in real estate and infrastructure investments. Moreover, unorganised to organised shift due to regulatory compliances and brand aspirations will benefit organised players like RRK. Indian W&C Exports (INR 148bn in FY23) is expected to grow at a strong pace over the medium term on the back of ‘China+1’ strategy of most global customers. RRK is expected to be a big beneficiary of this long-term shift as it holds one of the highest number of international product certifications and is among the top 2 exporters of W&C from India in FY23 (largest in FY22). Exports constitute c.25% of its W&C revenue (FY23) and over 95% of its exports are ‘RR Kabel’ branded. FMEG, an INR 1.1trln industry, is estimated to see 8% CAGR in FY23-27. RRK, with its strong W&C positioning and having a wide FMEG portfolio (encompassing categories that constitute 75% of the industry) and distribution set-up, is well placed to see significant growth (expect 22% CAGR in FMEG revenue in FY23-27), albeit on a low base (11% of FY23 revenue). We estimate RRK to post 20%/37%/44% CAGR in Revenue/EBITDA/PAT in FY23-26 (24%/16%/23% in FY19-23) on the back of strong revenue growth (20%/22% CAGR in W&C and FMEG) and operating margin improvement in both segments. We estimate FY26 RoE/RoIC (post tax) of 22% /20% respectively. We initiate coverage with a BUY rating and Dec’24TP of INR 1650, basis 35x Dec’25 EPS (c. 21% upside) and estimate possibility of 20% IRR over 3 years.

Strong growth prospects for consumer electricals industry: Consumer Electricals industry (Wires &Cables + FMEG) is estimated to post 10% CAGR in FY23-27 to reach INR 2.7trln in FY27E) on the back of growth in real estate (residential and commercial), rising electrification, disposable income growth and aspirations and government and private investments in infrastructure projects. RR Kabel is well placed with its strong product portfolio (across W&C and FMEG segments) and scaled up distribution network (115k retailers vs. over 200k for top players).

RRK to ride on W&C exports opportunity: W&C exports has grown by 23% CAGR in the past 4 years and could rise significantly due to strong demand in developed markets (growth+replacement demand) and ‘China+1’ policy of several nations. RRK was India’s 2 nd largest W&C exporter in FY23 (largest in FY22; exports 22-25% of W&C revenue in past 10 years) and holds one of the highest number of international product certifications. More than 97% of sales are distributor led (over 95% of exports under ‘RR Kabel’ brand), reflecting significant strength of RRK in export markets

FMEG scale-up to change face of the company further: FMEG, introduced in 2012-13, has seen significant organic scale, aptly boosted by acquisitions (FY20/23) and has now achieved a respectable INR 6.4bn in revenue (FY23). FMEG is largely led by fans, lighting and small appliances (encompassing 75% of the FMEG categories). Distribution expansion and wallet share gains should deliver the significant aboveindustry growth for RRK along with improved margins.

Best growth among peers with prudent balance sheet management; expect exponential growth in profit: RRK has delivered the highest compounded growth in revenue among peers and robust EBITDA growth across 3/5/10yr period along with respectable RoCE profile (>15% post tax). We estimate RRK to post 20%/37%/44% CAGR in Revenue/EBITDA/PAT in FY23-26 on the back of strong revenue growth (in both W&C and FMEG) and operating margin improvement. We initiate coverage with a BUY rating and Dec’24TP of INR 1650, basis 35x Dec’25 EPS (c. 22% upside). We estimate CMP offers 20% IRR for RRK over 3 years. Key risks - Any sharp swing in copper price demand.

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