KEI Industries Ltd Q1 FY27 Earnings Call: Guides 11-12% Operating Margin, Order Book at Rs. 4,292 Crore

KEI Industries Ltd held its Q1 FY27 earnings call on August 03, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Revenue Growth, Margins Expand Across the Board

• Q1 FY26-27 net sales of Rs.3,185 crore — growing 22-23% YoY, with wire & cable sales up 24.4%.
• EBITDA of Rs.415 crore (margin 13.04%) — and PAT of Rs.274 crore (margin 8.61%), both recording YoY increases.
• Domestic wire & cable sales of Rs.2,784 crore — grew 29% YoY, while exports of Rs.341 crore declined YoY due to Middle East disruptions and US customs duties.
• EHV cable sales of Rs.186 crore — grew 47% YoY; B2C distribution contribution reached 59%; active dealers stood at 2,128.
• Capacity utilization: cable 72%, house wire 61%, stainless steel wire 91%, communication cable 45% — Sanand ramp-up expected to increase month-on-month.

Rs.4,292 Crore Order Book Backed by Structural Demand Tailwinds

• Pending order book of Rs.4,292 crore — comprising EPC Rs.2,271 crore, domestic cables Rs.2,400 crore, EHV cables Rs.793 crore, and export orders Rs.822 crore.
• Management cited demand drivers from data centers, power T&D, renewables, EVs, infrastructure, and housing — expecting more than 20% growth over the next 2-3 years.
• Government expenditure budgets set in value terms — management cited "central government's FY 2026-2027 capex budget of Rs.11 lakh crore and state governments' combined Rs.6 lakh crore remain fixed regardless of commodity prices" as a structural support for revenue visibility.
• Domestic demand strong across power generation, T&D, data centers, manufacturing, urban infrastructure, railway, housing, and thermal power — demand rotates across sectors annually, with no single sector dominating.
• Management cited historical precedent (FY 2018-2019 to FY 2019-2020) — where cable companies grew despite falling copper prices, driven by value-based capital expenditure allocations.

Operating Margin Crosses 11% Threshold, Sustained by Mix and Leverage

• Q1 FY26-27 wires and cables margin rose sequentially to 13.6% — from 12.4%, driven by better product mix, higher retail contribution, and high-margin export orders.
• Operating margins by segment: EHV cables ~15%, LV/MV institutional ~10.5%, retail ~11%, exports >11% — margin expansion attributed to higher EHV contribution, increased retail/dealer distribution (59% from 51%), and operating leverage.
• Management guided for FY27-28 operating margins in the 11-12% range — stating the company has crossed the previous sub-11% hurdle, with the 11-12% band now sustainable.
• Gross margin expected to remain in the 11-12% range — with quarterly fluctuations of 0.5-1%, supported by product mix, market mix, and operating leverage; Q1 FY26-27 EBITDA margin of 12.43% reflects this trajectory.
• Other income in Q1 FY26-27 was lower than the ~Rs.40 crore in FY25-26 — as the prior year benefited from interest on QIP funds; this higher level is unlikely to sustain in FY26-27.

Sanand Ramp-Up Underway, Rs.700 Crore New Plant Announced

• Sanand greenfield capex of Rs.2,000 crore — Rs.1,722 crore spent as of 30 Jun 2026; balance Rs.300 crore to be spent in FY26-27; funds EHV, LV, MV, and electron beam cables.
• Sanand Phase 1 already at 250% utilization — expected to contribute Rs.1,500-2,000 crore revenue in FY26-27, with full capacity revenue guided at ~Rs.6,000 crore.
• Management expects 70-75% utilization of Sanand's Rs.6,000 crore capacity by FY27-28 — implying ~Rs.4,000 crore revenue from that facility alone.
• New Rs.700 crore capex announced for Salarpur (Bhiwadi) factory — for LV and MV power cables, with construction expected to take two years; FY26-27 capex includes Rs.300 crore for Sanand and Rs.300-350 crore for Salarpur.
• Annual capex guided at Rs.600-700 crore for the next 3-4 years — the Rs.2,000 crore Sanand spend is expected to generate Rs.6,000-7,000 crore revenue within two years (by ~FY28-29), with asset turns improving from 3x to 4x.

Retail Mix Hits 59%, Exports Poised for Recovery

• Retail sales mix reached 59% in Q1 FY26-27 — from 51% previously, driven by focus on lower working capital; wire growth outpaced cable growth due to strong construction activity.
• Export revenue share target for FY26-27 is 17-18% — up from 16% in FY25-26, implying ~30-40% growth for the year, despite a 7-8% decline in Q1 due to Middle East shipping disruptions and US market issues.
• Management expects 50%+ growth rate for the remaining nine months — to achieve the export target; focus markets include US (oil & gas, data centers), Australia (solar/wind, industrial), Middle East (oil & gas refineries), and Africa (distribution/transmission).
• EHV cable market opportunity in India >Rs.3,000 crore — competitors include Universal Cables and imports; EHV contribution expected to be 9-10% of revenue from capacity being added.
• KEI has no exposure to BharatNet projects — as it does not manufacture optical fiber cables; management will no longer provide product-wise sales breakdown (house wires, LT, HT cables) due to competitor usage of the data.

Conservative 20%+ Growth Target, Rs.25,000 Crore Milestone by FY29-30

• Management maintained conservative guidance of 20%+ growth for FY26-27 — but expects to exceed it, with overall revenue growth target of 24-25% for the year; industry growth was 33-35% in the period.
• EBITDA margin guidance of 11-12% for FY26-27 is purely operating margin — excluding other income; management expects to sustain above 11% going forward, with price hikes directly linked to copper cost fluctuations (fully passed on in Q1).
• Turnover milestone of ~Rs.20,000 crore targeted for FY27-28 — and management "re-affirmed guidance of Rs.25,000 crore by FY29-30" as a long-term revenue aspiration.
• Growth constraints cited are capital allocation discipline and greenfield stabilization time — not lack of demand; management is reluctant to exceed ~30% growth even with market opportunity, prioritizing sustainable capital allocation.
• ROCE at ~23-24% in Q1 FY26-27 — management noted it could reach ~28% immediately if creditor levels were increased (currently <1.5 months from 3.5 months), but they keep creditors low to save interest cost.
• If copper prices decline, volume will do the "heavy lifting" to maintain revenue — as budgets are allocated in value terms and will continue to be spent; the positive demand outlook reflects this value-driven dynamic.