KEI Industries Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Export-led quarter, guidance raised: Export sales hit an all-time high of ₹472 crores (up 96% YoY), driving management to raise FY26 growth guidance from 17-18% to definitely crossing 20%.
• Domestic growth deliberately moderated: Domestic growth was muted at ~3% because capacity was intentionally shifted to exports to seed new geographies ahead of Sanand capacity coming online, not because of weak demand.
• Sanand Phase 1 delayed by ~4 months: Extended rains and contractor labor shortages pushed commissioning to November 2025, with gradual revenue conversion from Q4 and meaningful contribution only in FY27.
• Margins steady at 10-10.5% with expansion promise: Despite mix shifts toward exports and housing wire, margins held; management expects 1-1.5% EBITDA margin improvement once full Sanand EHV capacity is operational, likely in FY28.
• What to watch next quarter: Whether Sanand Phase 1 commissions on the revised November timeline, the pace of export order conversion from newly opened US and European markets, and any resolution of the US tariff situation that paused exports there.

Export Surge & Market Diversification

• Record export performance: Export sales reached ₹472 crores, nearly doubling YoY, driven by new geographies including the US, Europe, Australia, Middle East, and Africa, with product mix spanning EHV, MV, LV, and control/instrumentation cables for oil and gas, fertilizer, and process plants.
• US and Europe now material: These newly opened markets contributed ~25% of total exports this year, though US exports are currently paused pending tariff resolution.
• Strategic capacity allocation: Management deliberately shifted domestic capacity to exports to maintain presence in new geographies created last year, ensuring markets are ready when Sanand capacity comes online. Domestic institutional order book remains strong at ₹2,100 crores pending.
• Export target trajectory: Exports expected to close this year at 13-14% of sales, rising to around 18% in FY27.

Anil Gupta: "The purpose of diversification of markets is that even if there is a slowdown in any particular market, our company's growth is not slowed down."

Sanand Plant: Delay, Ramp-Up & Revenue Outlook

• Phase 1 delay confirmed: Commissioning slipped ~4 months to November 2025 due to extended rains in Gujarat and contractor labor shortages. More than 50% of capacity will be on board by November.
• Revenue conversion timeline: Gradual conversion to revenues begins Q4 FY26, with stabilization and ramp-up flowing into next financial year. Management targets ₹2,000-2,500 crores topline from Sanand in FY27.
• EHV export orientation: Sanand plant designed for export markets with all technical requirements, plus domestic market up to 500 kV voltage grade. Certification process has been initiated, with existing Chopanki facility certifications providing relevance.
• Phase 2 timeline absent: No specific timeline given for when Phase 2 will be commissioned.

Anil Gupta: "You can build a plant and capacities in one go, but creating markets may take some time."

Demand Drivers & Volume Dynamics

• Broad-based demand tailwinds: Growth driven by energy sector (solar, wind projects), transmission and distribution, data centers, and construction activity across commercial and residential real estate and infrastructure projects.
• Volume growth healthy but mix-sensitive: Overall H1 volume growth was 15%, but Q2 saw copper cable volume up 18% while aluminum rose only 3%. Copper cable mix shifted from 42% to 45% of the total, and since copper price is ~3x aluminum, value growth printed at 22%.
• HT/EHV revenue decline explained: The Y-o-Y decline was due to uncleared finished goods that could not be dispatched for customer-attributable reasons, plus last year EHV capacity was partially utilized for HT power cable given insufficient EHV sales.
• Data center exposure unquantified: Management described data center cable supply as "substantial" but could not provide exact revenue contribution figures.

Margins: Stability Now, Expansion Later

• Margins held at 10-10.5%: Despite mix changes (more exports, more housing wire, less EHV/HT/LT), EBITDA margins remained in the 10-10.5% band, consistent with the last 15 years of commodity price pass-through resilience.
• Channel mix indifference: Only 0.5% margin differential between retail and institutional/export, so management is indifferent to channel mix and allocates capacity purely on utilization optimization.
• Expansion tied to Sanand scale: 1-1.5% EBITDA margin improvement expected from economies of scale once the entire Sanand capacity is commissioned, likely in FY28. FY27 margins expected to be similar to FY25 and FY26 levels.
• Power cost initiative: A renewable energy tie-up with solar developers for a 15-20 year combination solar-wind agreement is expected to conclude in the next 2-3 months, which will reduce power costs.

Rajeev Gupta: "These kind of margins, 10% to 10.5%, will remain there. And once the EHV and the full operational of the Sanand plant is there, then 1% to 1.5% margin, EBITDA margin will get improved mainly because of economy of the scale."

Capacity Utilization & Measurement Nuance

• EHV capacity near-full: Current EHV capacity is ~₹650 crores with an order book of ₹636 crores, indicating near-full utilization.
• Kilometer-based metric understates high-voltage output: Capacity utilization is calculated in kilometers, so when higher-voltage cables are produced, utilization appears lower even though value is higher. EHV cable value can be 6-10x higher than low-voltage cable per kilometer.
• Incremental growth from existing capacity: 5-7% of next year's 20% growth is expected to come incrementally from existing capacity, with wire production remaining only at the Silvassa plant.

Rajeev Gupta: "It is not the exact reflection of the sale, because this calculation is based on the kilometer. But as for the high voltage power cable rail will be 6 times higher than the low voltage or maybe more than that, 10 times higher."

Retail & Institutional Mix

• Dealer network at 2,100: Active working dealers stood at 2,100 as of September 30. An earlier 2,343 figure cited by an analyst was a revenue value, not a dealer count.
• B2C cable-to-wire split roughly 50-50: Management gave a rough range of 55-45 but noted it can reverse, varying by ~5% either way, and declined to provide precise product-wise volume splits.
• Retail pricing agility: Retail segment pricing is revised every 15 days, while B2B orders carry price variation clauses, insulating margins from commodity fluctuations.
• EPC segment steady-state target: Management aims to maintain ₹400-500 crores in annual EPC sales. Branding spends will continue at 0.5% of revenue.

Guidance & Commitments

Key Metrics