KEI Industries Ltd Q1 FY2026 Concall Summary

Key Takeaways

• Volume-led quarter, exports surge: Cable & wire volume grew ~28–30% YoY on stable metal prices, while export cable & wire jumped 122% YoY from a low base as new geographies opened.
• Full-year guidance held at 18% despite a 30% cable quarter: Management calls the quarterly print misleading because Q3 and Q4 bases are very high; it remains "conservative" and insists performance will be "far better" than the number.
• Sanand is the margin story, but it is a FY27–28 story: Phase 1 LT/HT production starts September 2025, EHV only in Q1 FY27, and full depreciation hits next year; the EBITDA uplift from absorption arrives only when utilization crosses 50–60%, likely by FY28.
• Export margin convergence is closer than it looks: The domestic-export margin gap is just 0.5%, and management expects EBITDA to "automatically" reach 11.5% or more once exports hit 18% of revenue.
• What to watch next quarter: Whether Sanand commissioning stays on track for September, the pace of export order inflow as US tariff uncertainty lingers, and any quantification of logistics savings once the plant begins shipping.

Volume Growth & the Quarterly Print

• Volume, not price, drove the quarter: Copper and aluminum prices have been stable since last year, so the reported revenue growth is almost entirely volume-led, with management estimating volume expansion at roughly 28–30%.
• The 30% cable growth number overstates the run-rate: Q3 and Q4 of the prior year carry very high bases, so quarterly growth rates will compress as the year progresses; management explicitly warned against annualizing the Q1 print.
• Capacity is not the bottleneck today: Brownfield capex at Silvassa and Pathredi last year leaves cable capacity at only 74–75% utilization, so the current-year growth target faces no capacity constraint.
• B2C share dipped as institutional raced ahead: B2C contribution fell to 51% from 53% because institutional cable grew faster, shifting the mix to 45% institutional vs 39% a year ago.
• House wire growth will normalize: The segment grew from a very low base; management expects it to settle at 24–25% for the next 2–3 years but does not know what happens beyond that window.

Anil Gupta: "But definitely, I mean our -- we are a little conservative in giving guidance. Our performance will be far better, I'm sure about it."

Exports: Geography, Mix & the Margin Bridge

• Export cable & wire doubled, and the base was tiny: 122% YoY growth came from adding the US and Europe as new geographies; overall export growth was 61%.
• The business is overwhelmingly direct, not distributor-led: 90% of export revenue goes straight to EPC contractors and utilities, with only 10–15% through distributors, mainly in the US; orders are short-cycle, completing within 4–5 months.
• US is a small piece, and it is currently slow: Tariff uncertainty has US customers waiting and projects moving slowly; management believes the uncertainty settles in 2–3 months but notes no tariffs have actually been operationalized.
• The rest of the world is picking up the slack: Exports to the Middle East, Australia, Africa and Europe are "substantially high," and US dependence is very small.
• Australia competes with China, and always has: China has been a strong player in Australia for years with better proximity; KEI has exported there for over 11 years despite that, and management did not directly address whether China's zero-tariff policy changes the dynamic.
• The margin gap is nearly closed: The difference between domestic and export margin is only 0.5%, and management expects EBITDA margin to "automatically" reach 11.5% or more when exports hit 18% of revenue.

Rajeev Gupta: "So when it will reach to 18%, then it is -- it will automatically come up to 11.5% or maybe more. automatically, it will come."

Sanand: Timeline, Capacity & the Margin Payoff

• Phase 1 is imminent: Commercial production of LT and HT cable begins in Q2, by September 2025; sales will start reflecting from Q3 FY26.
• EHV is the margin lever, and it arrives last: Extra high-voltage production starts only at the end of Q1 FY27, meaning full depreciation from the EHV block also hits only next year.
• The ramp is a three-year journey: Management expects to reach 50–60% capacity utilization by FY27–28, and only then will EBITDA margin meaningfully improve as depreciation is absorbed.
• Capacity is fungible if EHV orders are slow: If EHV orders are insufficient, the same capacity can manufacture HT cables; no capacity sits idle.
• Logistics savings are real but unquantified: Management declined to put a number on freight cost savings from the Sanand location, saying it will be able to say something only by the end of this year once the plant is running.
• The next expansion is already teed up: Land has been purchased in Vadodara, and the company plans to keep investing ₹600–700 crores annually to maintain 20% top-line growth after Sanand.

Rajeev Gupta: "It will increase a little bit. As Anilji earlier told that it will take some time, at least for 1 year time to ramp up the capacity, utilize the capacity, to absorb the depreciation over there. So it will take time. So by '27-'28 financial year when the -- we will be utilizing almost 50%, 60% capacity or may plus, so then a little bit EBITDA margin will get improved."

End-Market Demand & Institutional Drivers

• Power T&D and renewables are the engine: Institutional cable growth is driven by power transmission and distribution companies, their EPC contractors, solar power developers and power evacuation infrastructure.
• Thermal is coming back, and storage is emerging: Thermal power projects are being planned again, and battery energy storage projects are adding a new demand layer.
• House wire distribution is being rebuilt: Weak dealer-distributors are being replaced with stronger ones, with a focus on the Southern and Eastern belts where penetration was lower; management says there are "long miles to go" to reach every market.
• EPC outside cable collapsed on a tough comp: EPC sale other than cable declined ~53% because a Gambia project executed last year did not repeat.
• HVDC is a two-year development story: Prequalification and type tests for HVDC cables will take around two years; management cannot give projections at this stage.

Guidance Philosophy & Capital Allocation

• The company guides conservatively and over-delivers: Management repeatedly stated that quarterly numbers do not reflect the full year, that it always maintains full-year guidance, and that performance will be "far better."
• Capex is the priority, not shareholder returns: With ₹500–700 crores of annual capex needed to sustain 20% growth, management has no plans for dividends, buybacks or M&A; it says it can think about those only after 2–3 years.
• QIP deployment is underway: ₹913 crores of the ₹2,000 crore QIP has been utilized as of 30 June 2025.
• Land bank is being built for the cycle beyond Sanand: Two land parcels were purchased, one in Rajasthan (~74,000 sq m) and another in Sanand for backward integration; capex on these starts only after Sanand is complete.
• Credit ratings remain strong: Long-term ratings from CARE, India Rating and Research, and ICRA stand at AA+, with short-term at A1+.

Rajeev Gupta: "Sir, we will remain in the wire and cable. But every year, we need to invest another Rs.600 crores to Rs.700 crores to increase the capacity to maintain the 20% top line."

Guidance & Commitments

Key Metrics