KEI Industries Ltd Q3 FY2026 Concall Summary

Key Takeaways

• Capacity-constrained quarter, breakout ahead: Cable volumes grew only ~10% as existing plants ran at peak, but Sanand trial production began in December and Q4 growth is guided at ~25% plus.
• Margin expansion story intact: EBITDA margin improved YoY on mix shift toward EHV and exports, and management retained its ~100 bps addition over 2 years guidance, with ~11% expected next year.
• Competition is noise, not a threat: New entrants are flooding the Wire segment, but KEI grew 22-23% anyway, and management argues brand, distribution, and a full product basket create a 5-7 year moat.
• Sanand unlocks the next leg: The facility is expected to contribute close to ₹2,700 crores in FY27 and an incremental ₹6,000 crores top line by FY29, underpinning the 20% CAGR target for the next 4-5 years.
• What to watch next quarter: The pace of Sanand's ramp-up through March, whether Q4 delivers the guided ~25% growth, and any firming of the next ₹2,000 crores capex plan.

Sanand Ramp-Up & Capacity Unlock

• The bottleneck breaks now: Cable segment growth was limited to ~10% volumes in Q3 because existing capacities were at peak; Sanand's contribution begins in Q4 and ramps through FY27.
• Trial production live: LTHT trial production started in December, with a gradual ramp-up in January, February, and March. The BIS license for LT cables is already received; HT cable license was expected by end of January.
• Electron beam edge: Electron beam equipment for manufacturing pure solar wires is expected to be commissioned in April, with the whole plant capitalized by March 2027.
• Revenue bridge to FY29: Sanand is expected to deliver close to ₹2,700 crores turnover next year and an incremental ₹6,000 crores top line by FY29, forming the backbone of the 20% CAGR target.
• HT cable recovery ahead: HT cable revenue dipped because EHV capacity, previously used for HT, is now fully occupied with EHV orders. As Sanand ramps up, HT cable output will substantially improve.

Rajeev Gupta: "So next year also from the Sanand itself, we will have the turnover close to INR2,700 crores from the Sanand itself. And whatever deficient will be there, it will be absorbed. So we don't guide or we don't think that our EBIT margin will go down."

Margins: Walk, Drivers & Guidance

• YoY improvement delivered: EBITDA margin improved year-on-year, driven by increasing capacity, product mix shift toward EHV and export segments, and low fixed overheads from large volumes.
• Copper volatility contained: Old orders are served with old inventory, retail prices adjust every 15 days, and everything is passed on. A sudden copper price move can cause a 0.5% to 1% margin swing in a quarter, but full-year margins are guided to improve.
• Guidance retained: Management reiterated ~100 bps EBITDA margin addition over 2 years, with next year expected to achieve ~11% overall for the full year.
• Depreciation timing: The full depreciation load from Sanand hits only in FY28, at ~5% of ₹2,000 crores (~₹100 crores), giving margins a multi-quarter runway before the full charge lands.
• Export mix tailwind: Margin guidance is based on the combination of domestic and export markets; both are expected to improve, with exports carrying structurally better realizations.

Demand & Competitive Moat

• Energy demand is structural: Management sees no deceleration in cable demand, citing exceptional energy requirements from industries, households, and data centers.
• Wire segment: growing through the noise: New pan-India entrants (Torrent, Surya, Roshni, Luker) have entered the Wire segment, yet KEI grew 22-23% year after year. Management argues the moat is real: brand image takes 5-7 years to build, a distribution network takes 4-5 years to reach scale, and KEI offers a full product basket with approvals from leading consultants and architects.
• Cable segment: barriers are higher: Management does not see any new player entering the Cable segment; pre-qualification is required, and KEI's strong presence in projects and exports provides insulation.
• Outsourcing model skepticism: Management believes the outsourcing model will not work in Wires and Cables because the market is too competitive; after paying manufacturing costs and profits to a contract manufacturer, a brand alone cannot earn sufficient margin.
• Market growth absorbs entrants: Demand itself is growing 13-14%, so new players will get adjusted over the next few years without necessarily displacing incumbents.

Anil Gupta: "I don't think that energy sector will see slowdown because of the exceptional energy demand required by industries, households and data centers and other consumers."

Export Engine & EHV Leadership

• EHV milestones stacking up: KEI became the first Indian company to supply 330 kV cables to Australia, supplied 220 kV cables to UAE and Spain, and is the only Indian company qualified in National Grid UK's framework agreement up to 400 kV. It also expanded to the Caribbean, supplying to the West Indies.
• Export growth trajectory: Exports are expected to grow strongly for the next few years; not every year can double, but the base is small and world markets are vast. Management sees no ceiling: "sky is the limit."
• Export share ambition: Close to more than 20% export share is visualized, but management needs more visibility to give better guidance due to uncertain geopolitics. US exports are currently on hold because of tariffs; current destinations are Europe, Australia, Middle East, and Africa.
• EHV demand structural: Demand for EHV cable is continuously rising for evacuation of power from renewable sources and new projects in power generation and transmission infrastructure.
• Domestic solar chain: KEI is supplying to the entire solar power chain, including Reliance's polysilicon factory at Jamnagar.

Anil Gupta: "Sir, world markets are very, very good. I mean, from India, what we are exporting is just a peanut. It depends on how much we are able to explore and exert ourselves into large economies."

Volume, Mix & Capacity Utilization Nuances

• Volume vs value distortion: Volume growth of 10-11% in Q3 reflects that volume sometimes gets exchanged between copper and aluminium cables. Copper cable is 3x the price of aluminium cable, so quarter-to-quarter volume cannot be exactly gauged from value. In quarters with more aluminium cable orders, volume appears higher but value is one-third; with more copper (e.g., export markets), value is high but volume is not looked at the same way.
• Domestic institutional sales optically weak: Domestic institutional sales grew only 3%, but this reflects capacity allocation: once export orders increased, limited capacity went to the export market. Since copper orders are 3x priced versus aluminium, value-based metrics can mislead.
• Capacity utilization is volume-based: The reported 76% utilization in Cables is based on volume; copper being 3x priced than aluminium means value-based utilization metrics would paint a different picture.
• Volume guidance: Management guides 16-18% volume growth as the way forward, with price inflation in inputs added on top.

Capex Pipeline & Next Leg of Growth

• Land bank secured: KEI bought new land in the current financial year with an investment of ₹92 crores and is also acquiring around 70 acres in Baroda.
• Next capex cycle: After Sanand, management plans to invest another ₹2,000 crores apart from Sanand over the next 3-4 years, with planning to begin in Bhiwadi (new land) next financial year.
• Plan still on the drawing board: The next ₹2,000 crores capex is not yet finalized; it will be cleared in the next 6 months, and management did not provide a segment-wise breakdown when asked.
• Backward integration status: KEI has done significant backward integration. For medium voltage cables up to 11 kV to 66 kV, it buys from DDev Plastiks; beyond these voltages, all compounds are imported from Borealis or Dow chemicals.

Guidance & Commitments

Key Metrics