Company Update : R R Kabel Ltd By Motilal Oswal Financial Services Ltd
Earnings in line; OPM expands 1.7pp YoY to ~7%
* RRKABEL’s 1QFY26 earnings were in line with our estimates. Consolidated revenue grew ~14% YoY to INR20.6b (in line). EBITDA increased ~50% YoY at INR1.4b (in line). EBITDA margin increased 1.7pp YoY to ~6.9% (in line). Adj. PAT increased 39% YoY to INR898m (in line).
* Revenue contribution from the domestic market was ~71% in 1QFY26 vs. 76% (each) in 1QFY25/4QFY25. Net working capital days stood at 52 days as of Jun’25 vs. 56 days as of Mar’25
* We have a Neutral rating on the stock. However, we will review our assumptions following the conference call on 1st Aug’25.
Revenue up 14% YoY; losses in the FMEG segment reduce YoY
* Consol. revenue/EBITDA/PAT stood at INR20.6b/INR1.4b/INR898m (up 14%/50%/39% YoY (in line with estimates). Gross margin increased 80bp YoY to ~18%. Employee cost increased 5% YoY (stood at 4.5% of revenue vs. 4.9% in 1QFY25). Other expenses increased 7% YoY (stood at 6.8% of revenue vs. 7.2% in 1QFY25). Depreciation/ Interest cost increased ~25%/30% YoY, whereas Other Income declined ~33% YoY
* Segmental highlights: a) Cables and Wires: Revenue increased ~16% YoY to INR18.3b, and EBIT increased ~23% YoY to INR1.4b. EBIT margin increased 45bp YoY to ~8%. b) FMEG business: Revenue declined marginally ~2% YoY at INR2.3b. The company reported a segment loss of INR71m vs. INR207m/INR91m in 1QFY25/4QFY25.
Highlights from the management commentary
* Revenue in the C&W segment improved, driven by strong demand, favorable copper price trends, improved realizations, and enhanced operational efficiencies.
* The FMEG segment reported a reduction in losses, supported by improved operating efficiencies and a favorable product mix, alongside modest volume-led growth.
Valuation and view
* The company’s performance was in line with our estimates, primarily driven by improved demand in the C&W segment and favorable copper price movement.
* We have a Neutral rating on the stock. However, we will review our assumptions following the conference call on 1 st Aug’25 (Concall Link).
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