KEI Industries Ltd Q3 FY2025 Concall Summary

Key Takeaways

• EHV collapse masked strong underlying growth: Domestic institutional EHV cable sales fell ~78% on permit delays, but HT power cable sales jumped 45% by absorbing that capacity, and retail crossed the 50%-of-sales milestone.
• Export ambition is now the headline story: Management guided 30-35% wire & cable export growth next year and a target of 15-17% of total sales within 2-3 years, anchored by new Sanand capacity and US/Australia demand.
• Sanand greenfield is the bridge to 20% CAGR: Phase 1 commercial production starts end-Q1 FY26, and the full project plus a follow-on Baroda expansion are meant to lift volume CAGR from the historical 14-15% to 19-20%.[15-16]
• Margins held despite the EHV drag: Full-year EBITDA margin is expected to match last year at ~10.8%, and management sees a path to 12%+ by FY27-28 as operating leverage from new capacity kicks in.
• What to watch next quarter: Whether EHV sales recover toward the guided INR50-60 crores in Q4, the pace of export order conversion ahead of Sanand commissioning, and any update on US tariff risk as export volumes scale.

The EHV Hole & How It Was Filled

• EHV domestic institutional sales collapsed ~78% in Q3 because right-of-way and other permissions for project execution did not come through, a recurring lumpiness management has documented across four years of INR300-660 crore swings.
• The freed-up capacity was redirected to HT power cables, which grew 45%, a trade-off that costs ~4-5% in EBITDA margin on the shifted volume but requires 1.5-2 months less working capital.
• The full-year EBITDA impact is small: management estimates the EHV shortfall at ~INR200 crores for the year, and at a 4% margin differential that is only ~INR8 crores lost.
• EHV is structurally a niche: the total Indian EHV cable market is just INR2,500 crores out of an INR85,000-INR1 lakh crore cable market, and EHV is only 6% of KEI's own sales, so management treats it as a portfolio item whose swings do not move the overall outcome. [17-18]

Rajeev Gupta: "Sir, the total market size of that business is INR2,500 crores. Why are you worried about it? Because the market is of INR1 lakh crores, INR85,000 crores to INR1 lakh crores cable market is there. In the entire market, the portion of EHV is INR2,500 crores. 2.5% market share, 2.5% market, whether it goes up or down, who is going to care?"

Export: The Next Leg of the Story

• Wire and cable exports grew ~30% in Q3, but overall export growth was only ~6% because EPC revenue from the Gambia project dropped from INR69 crores to INR13 crores, consistent with the deliberate EPC wind-down.
• Management guided 30-35% export growth next year, with the US contribution alone expected to reach ~INR500 crores, up from what management called "peanuts" relative to a US market 8-10x India's size.
• The Sanand plant is export-critical: the existing factory cannot supply the drum lengths required for EHV export orders, so the new Sanand EHV line, starting by March '26, unlocks that opportunity, with HVDC cable capability also in development and type-testing underway.
• EHV export margins are described as similar to domestic or sometimes higher, and potentially higher still if HVDC orders materialize.
• The 2-3 year vision is to lift export contribution from the current 11-12% to 15-17% of total sales, growing exports faster than the domestic business.

Rajeev Gupta: "Our earlier vision for reaching the retail was 50%. So now we have crossed that 50% vision, and now -- so now our future is -- we are targeting for export to grow more than the local growth, so we are targeting our contribution of export, which is -- right now is 11% to 12%, to 13%, maybe in 15% to 17% in next 2 to 3 years."

Capacity Build-Out: Sanand, Baroda & the 20% CAGR Bet

• Brownfield capex at Chinchpada and Pathredi 2 is complete, adding wire and power cable capacity that management says will enable 16-17% volume growth this financial year and close to 19-20% growth in FY26.
• The Sanand greenfield (INR800-1,000 crores planned) will house LT, HT and EHV cables. Phase 1 (LT and HT) begins commercial production by end-Q1 FY26; Phase 2 (including HVDC) starts by March '26, with depreciation on Phase 2 only hitting in FY27.
• Total capex spend over the next 15-18 months is ~INR1,100-1,200 crores, with INR400 crores in the current quarter and INR600-700 crores next financial year, funded in part by the INR2,000 crore QIP completed in November '24.
• A follow-on Baroda expansion is already planned: once Sanand is complete, KEI will spend INR700-800 crores annually for two years on an LT and HT power cable factory at its newly accumulated 60-acre Baroda site, targeting a INR5,000-6,000 crore top-line factory. [15-16]
• The 2030 vision is INR25,000 crores turnover, built on a 20% CAGR from next year, with management "very confident" of hitting that growth rate as early as next financial year.

Retail & Domestic Institutional Demand

• Retail contribution crossed 50% of sales, achieving a long-stated vision, and the business has been growing 20-25% continuously for 3-4 years through expanded presence, geography, influencer activity and sales team.
• The retail growth target is 20%-plus over time, with management acknowledging the replenishment cycle is a little longer than peers and linking improvement to the capacity expansion now underway.
• Domestic institutional demand is driven by solar power projects, power distribution companies' underground cabling projects, infrastructure and data centers, though management declined to quantify the mix because KEI supplies EPC contractors rather than end-users directly.
• Finished goods inventory rose as volume production increased ~28% in Q3 with new capacity online; management framed this as building stock for a future quarterly sales base of INR2,700-2,800 crores.

Margins, Returns & the Balance Sheet

• Full-year EBITDA margin is expected to be maintained at the previous year's level (~10.8%), with Q4 sales providing the catch-up, despite the EHV headwind and higher interest costs from capex-related LC utilization earlier in the year.
• The margin trajectory from FY27 onward targets close to 12.5%, crossing 12% by FY27-28, driven by operating leverage as Sanand and Baroda capacity comes online and economies of scale improve.
• ROCE is guided to improve to 28% within 3-4 years, up from current levels, as the heavy capex cycle converts to revenue.
• Interest costs rose because capex began before QIP funds arrived, requiring LC utilization and bill discounting; with QIP money now in hand, interest cost is expected to decline as working capital is funded from the raise.
• Creditor days improved as the company shifted from metal purchases on cash or LC (where KEI bore interest) to cash purchases, reducing LC utilization from ~INR1,000 crores to ~INR100 crores, a pure interest-cost and liquidity benefit.

Rajeev Gupta: "It's just like a portfolio which you are managing. We are also managing the whole portfolio with respect to the product, with respect to the segment of sales. That's how overall EBITDA margin comes to 10.5% to 11%, close to that."

Risks & Pushback

• EHV volatility is structural, not one-off: management's own four-year data shows sales swinging from INR366 crores to INR659 crores and back, and the company's response is that at 6% of sales it simply does not matter, a stance that may not satisfy investors who prefer predictable revenue streams.[17-18]
• US tariff risk was deflected: when asked about potential US customs duties on cable imports, management called current US volumes "peanuts" and said tariffs are "not in our hands," but the same US market is the anchor of the 30-35% export growth target for next year, creating a tension that was not resolved on the call.
• End-market opacity persists: management declined to provide any quantitative breakup of domestic institutional demand by end-market (solar, data centers, infrastructure), citing its position as a supplier to EPC contractors rather than end-users, limiting investors' ability to stress-test the demand outlook.
• The EPC wind-down continued as planned, with non-cable EPC revenue down ~49% in Q3 and ~27% over nine months, and management reiterated the intent to keep EPC at INR400-500 crores, or 4-5% of sales, removing a historical source of lumpiness but also a revenue line.[16-17]

Anil Gupta: "These are very small numbers from a country like U.S., where the market size is, I mean, at least 8x to 10x of India. So the -- I mean these are peanuts. We have to grow substantially from these numbers, as soon as our new capacity comes up onboard."

Guidance & Commitments

Key Metrics