RR Kabel -Wires, Cables and FMEG- Akalmand Bano Sahi Chuno

Stock Opportunities
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RR Kabel was listed on Indian exchanges on September 20, 2023. Company was incorporated in 1995.

RR Kabel is a reputed name in consumer electrical products used for residential, commercial, industrial, and infrastructure purposes in two major segments

  1. Wires and cables ~ 89 % revenue (house wires, industrial wires, power cables, and special cables)
  2. FMEG ~ 11% revenue (Fans, Lighting, Switches, Switchgear and Home & Kitchen Appliances )

Opening this thread as there isn’t one. Find more details on :

Manufacturing units - Located at Waghodia, Gujarat, and Silvassa, Dadra and Nagar Haveli, and Daman and Diu primarily manufacture wire, cables and switches.

Integrated Manufacturing units Located at Roorkee, Uttarakhand; Bengaluru, Karnataka; and Gagret, Himachal Pradesh, primarily manufacture FMEG products.

Outlook:
The wires & cables (W&C) industry is thriving on the government’s thrust on infrastructure and rural electrification, along with growth in commercial and residential sectors, 5G rollout, and digitization. Increasing demand from consumers to upgrade or replace existing products is an added bonus.

Multi billion dollar push and increasing demand for Energy - be is Solar, Wind, Coal, etcetera, puts organized players in Wires & Cables industry in a decent spot for long term.

Additional points:

  • 5th largest player in the Indian Wires and Cables(W&C) industry by value in FY23.
  • Main competitor - Havells, Polycab, KEI, Finolex
  • Electrical conglomerate exports to 65 countries worldwide. (Yet to launch in Africa & South America- No immediate plans- potential trigger)
  • Products have 35 international certifications- significant number

Brand Ambassador - Akshay Kumar since 2018

Founder Chairman: Migrated from Bangladesh to Nepal and then back to his roots in India. Rameshwarlal Kabra started RR Kabel in Mumbai. In 2018, he received the Padma Shree honor by the President of India, Ram Nath Kovind, for his work in rural and tribal societies. Padma Shree is fourth highest civilian recognition in Republic of India

Risk analysis & assessment - The company is exposed to following risks

(a) Market Risks
- Interest Rate Risk - Likelihood high, Impact medium
- Foreign Currency Rate fluctuation - Likelihood high, Impact high
- Commodity Price - Likelihood very high, Impact very high
(copper and aluminum prices on the London Metal Exchange)
- Raw material availability risk - Likelihood low, Impact very high
- Counterfeit products - Likelihood high, Impact medium
- Competition - Company does not have significant Moat compared to its peers. Negative.
- Items marketed using the company’s branding by unaffiliated parties may have a detrimental impact on the company’s competitive position. Negative.
- Quality - Company has been particular to obtain right certifications to assist in geographies where it matters the most. Positive. Certifications
- Brand recall/acceptability: Client stickiness is high. Commands 7% share. Onboarding of Electricians who often play role of influencers, grown from 61k to 300K+ in last two years

(b) Liquidity Risk (difficulty in raising fund) - Likelihood low, Impact medium

(c) Credit Risk
- Trade receivable risk - Likelihood high, Impact medium
- Financial instrument risk - Likelihood high, Impact medium
(Hedging methodology of forward contracts/currency swaps is not transparent -applies to raw material imports and exports)

(d) ESG Risks - Likelihood high, Impact medium
The company is forward looking future
ready and resilient to climate and
other ESG risks

Disclaimer:
I have gathered information solely based on publicly available data and have not interacted with company’s management.
I am invested in the company so my views might be biased.

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Please add detailed risk analysis. Till you comply, the thread remains locked.

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RR-KABEL

R R Kabel Q1 FY25 Analysis: Key takeaways!!

Business Outlook:

  • Reported highest-ever quarterly revenue of INR 1,808 crores, up 13% YoY
  • Wire and cable segment remains core, contributing 87% to revenue
  • FMEG segment growing rapidly at 32% YoY
  • Management confident of outperforming industry growth rates

Strategic Initiatives:

  • Launched innovative FireX LS0H-EBXL housewire to meet new safety regulations
  • Expanding manufacturing capacity with INR 500 crore capex by March 2025
  • Transitioning FMEG brand from Luminous to RR Signature
  • Focusing on high-margin products and distribution expansion

Trends and Themes:

  • Infrastructure and real estate boom driving demand for cables
  • Shift towards safer, halogen-free wires in public/commercial buildings
  • Growing exports, with R R Kabel being largest wire/cable exporter from India
  • Increasing share of cables vs wires in overall product mix

Industry Tailwinds:

  • Government focus on infrastructure and real estate development
  • Potential for real estate to contribute double-digits to GDP
  • Strong demand from sectors like railways, defense, solar power
  • Export opportunities, especially in European markets

Industry Headwinds:

  • Raw material price volatility, especially copper
  • Container shortages and shipping delays impacting exports
  • Slowdown in domestic wire segment
  • Intense competition in FMEG space

Analyst Concerns and Management Response:

  • Margin pressure in Q1: Management attributes to raw material volatility and product mix shift, expects recovery
  • FMEG losses: Higher ad spend for brand transition, expects breakeven in 3-4 quarters
  • Cable capacity constraints: New capacity coming online from September 2024 onwards
  • Geographic concentration: Focusing on expanding presence in South and East India

Competitive Landscape:

  • Positioned as 4th largest wire and cable company in India
  • Strong presence in West and North India markets
  • Rapidly growing FMEG business, transitioning to own brand
  • Facing competition from established players in both segments

Guidance and Outlook:

  • Targeting 60-80 bps EBIT margin improvement in wire & cable segment for FY25
  • Expect 20% volume growth in exports
  • Aiming for 25-30% revenue growth in FMEG segment
  • Overall volume growth target of 20% for next 2-3 years

Capital Allocation Strategy:

  • INR 500 crore capex plan on track, to be completed by March 2025
  • Funded through internal accruals, no additional debt
  • INR 300 crore cash outflow for capex in FY25
  • New capex plans beyond FY25 under consideration

Opportunities & Risks:

Opportunities:

  • Expansion in underpenetrated markets (South/East India)
  • Growing export business
  • New product launches in high-margin categories

Risks:

  • Raw material price volatility
  • Intense competition in FMEG segment
  • Potential oversupply in wire & cable industry

Regulatory Environment:

  • New Central Electrical Authority regulations mandating halogen-free wires
  • Company well-positioned with FireX LS0H-EBXL product

Customer Sentiment:

  • Strong demand in cable segment, especially from institutional customers
  • Positive reception to RR Signature brand transition in FMEG

Top 3 Takeaways:

  1. Strong volume-driven growth despite challenges, confident of outperforming industry
  2. Margin pressure in short-term, but management expects recovery and improvement
  3. FMEG business scaling rapidly, breakeven expected in 3-4 quarters
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Article in brand equity promoting safety and RR Kabel brand. Worth a read (2 mins)

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Summary of Havells, V-Guard, KEI, Polycab, RR Kabel on Q2-2024

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RR Kabel | Management Guidance

  • Expect 15% volume growth in Q4 and may miss 20% volume growth guidance
  • Company expects margin improvement of 100-120 bps next year onwards.
  • EBITDA to become positive by Q1FY26.

Watch here - https://youtu.be/Kdz61kHP-aM

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RR Kabel over reacted and now 52wk lows!

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Adani & Birla’s entry in cables and wire business. Impact absorbed, recovery in sight.

Given the collective knowledge and insights present here on this forum, it is surprising that such crucial information sometimes surfaces late—or not at all—when some among us might have been aware earlier. All such large entry announcements needs tons of prep work/time and might have given away some signs. If one looks in hind sight, the smart money had started moving out even before the announcement.

This raises an important question: Are we drifting away from the forum’s spirit of sharing and growing together? The strength of this community lies in our willingness to keep each other informed, ensuring that we all benefit from relevant developments. If we withhold insights—intentionally or unintentionally—we risk diluting the very essence of what makes this forum valuable

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R R Kabel is number 3 player following Polycab and KEI. Market cap is 20k Cr.

There is decent chance the company would grow to 80k Cr market cap (4x) in foreseeable years.

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Aditya Birla Group on Thursday launched its new wires and cables business, branded Ultravolt, with an investment of Rs 1,800 crore and a target of becoming one of the top two players in the segment within five years.

Read More:

https://www.moneycontrol.com/news/business/companies/rapid-rise-of-data-centres-to-fuel-wires-cables-boom-says-kumar-mangalam-birla-14022118.html

This is giving run to existing players like KEI Industries, PolyCab, RR Kabel with their price correcting sharply.

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In the cables and Wires segment, deep urban, semi rural and rural networking is required. It takes a good amount of time to establish any meaningful and trustworthy association. In my opinion this statement “target of becoming one of the top two players in the segment within five years” is way to advertise the NEW product supplier. One cannot dethrone the existing players who have deep routed expertise on the ground.

If the share price breaks, its an opportunity to buy existing players and build a satellite position in Ultravolt when it becomes available in the equity market

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Fully agreed, using this opportunity to increase my stake. Any new player will take few years before they can make visible impact and with industry growing by 10-15%.

Will be worth watching Q2/Q3 FY27 commentary from Polycab and KEI on pricing discipline and margin trends as the real signal, rather than the marketing/branding news itself.

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RR Kabel dropped by 20.56% from its peak price of ₹2,967 to ₹2,357 in just 5 sessions.

Looking at the overall market size and the pedigree, does this look justified or knee jerk over reaction?

The irony is UltraVolt infused ₹1800 crore over two years starting last year

AND

It resulted in wiping out over ₹2744 crores in investor wealth in just two sessions ! (and total ₹23,500 crores in listed players). AB Group must be laughing all the way !

Do note - RR Kabel holds a dominant, lower double-digit market share in the premium consumer housing wire category. It has exceptional operational metrics, with a Return on Equity (ROE) of 20.83% and a Return on Capital Employed (ROCE) of 28.43%

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(All details are sourced from open and publicly available information)

The stock price has irrationally fallen in the last few days. In a way its good that weak hands moved out and the stock should see secular growth in the near term.

2026-27 Q2 Strong results- See below.

Financial Metric Q2 FY 2026-27 (Current) Q2 FY 2025-26 (YoY) Growth (%)
Revenue from Operations ₹3,284 crore ₹2,164 crore :up_arrow: 51.8%
Operating EBITDA ₹286.2 crore ₹175.8 crore :up_arrow: 62.8%
EBITDA Margin 8.7% 8.1% :up_arrow: 60 bps
Net Profit (PAT) ₹180.6 crore ₹116.0 crore :up_arrow: 55.7%
Wires & Cables Revenue ₹3,010.5 crore ₹1,967.6 crore :up_arrow: 53.0%
Interim Dividend ₹6.5 per share — New

The stock reacted negatively post Q2 results primarily as management slightly lowered its full-year volume growth guidance to 14–15% (down from 16–18%). I personally appreciate Management’s transparent way of letting shareholders know upfront of the global business conditions.

H1 FY2026-27 Cumulative Table

Metric H1 FY27 H1 FY26 Growth
Revenue ₹6,452.2 cr ₹4,222.3 cr :up_arrow: 53%
EBITDA ₹571.4 cr ₹319.2 cr :up_arrow: 79%
Margin 8.9% 7.6% :up_arrow: 130 bps
PAT (Profit) ₹385.8 cr ₹206.3 cr :up_arrow: 87%

FMEG positive take: Revenue: ₹274 crore (Q2) / ₹561.9 crore (H1) — up 42% / 35% YoY. Loss: H1 loss cut to ₹12.4 crore (from ₹18.8 crore). Margin: Loss margin narrowed to 2.2% (from 4.5%). This is anticipated due to seasonal weakness as fans and coolers don’t see too much demand.

Disclosure. Invested and biased. Do your own research before arriving at any decision.

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The stock price was already down before the concall. So, that is not the reason for the fall.

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The price has fallen before and after con call (4 times volume and over 3+% fall). Somehow, smart money reads the managements mind even before the Con Call. But its worth to see what’s happening in the background

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I am taking only the basic indicators, will try to keep it simple.

  1. The On Balance Volume (OBV) indicator is consistently showing accumulation of stock, peaking around August/September
  2. RSI is oversold, but this is more of a trading indicator. It indicates a decent time to enter/add fresh quantity.

The numbers just don’t add up. Profits are growing, fundamentals remain intact and strong, business visibility/forecast is clear, and accumulation appears to be underway, yet the stock price keeps falling. Something doesn’t quite add up.

Could larger market participants be repositioning themselves during this correction? Possibly. But without evidence, it would be premature to label this deliberate price suppression.

It raises the possibility of a classic price-game: push the stock down, accumulate at lower levels, ride the subsequent rally, and exit once the desired price is reached. Essentially, a swing-trading play.

Long-term investors may have little to worry about as long as the fundamentals remain intact. But short-term players with limited capital, chasing quick gains could get caught on the wrong side of the trade. If the stock suddenly takes off, those betting against it could be in for a brutal surprise. Shorts can profit from a fall, but a sharp rally can turn the tables just as quickly.

Said that, further volatility cannot be ruled out, the market sets the stock price every day. The business creates the value over time. Stay invested in the sun rising sector of cables and wires.

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