RR Kabel is a 20-year-old wire and cable industry company with 5 manufacturing facilities in the country having been listed on the stock exchanges recently. The company posted Its highest ever quarterly revenue of Rs 1808 crores for Q1 FY25 reflecting a 13% year-on-year growth on the back of higher volume in the wire and cable segment. This was despite extreme heat conditions prevailing in the country, volatility in copper prices, and Lok Sabha elections. EBITDA stood at Rs 95 crores while profit after tax was Rs 64 crores for the first quarter of FY25. The wire and cable segment has been contributing to about 87% of the total revenue with exports contributing to approximately 24% of the total revenue.
The Fast Moving Electrical Goods or FMEG segment has achieved revenue of Rs 230 crores during Q1 FY25 showing an impressive 32% sales growth driven mainly by products such as fans, appliances, and electrical switches. Following a strong robust performance in the last FY24, RR Kabel has launched a new product in the house wire segment which is a major innovation in safety standards and aligns perfectly with the new regulation of the central electrical authority.
This halogen-free wire product is perfectly positioned to meet the critical safety requirements in the country’s construction sector. RR Kabel is undertaking numerous initiatives to bolster its growth over the next few years by introducing high-margin products, expanding its distribution channel, increasing its capacity, and launching new products. There is no doubt that the real estate market is a significant contributor to India’s GDP growth and it could propel the country to achieve double-digit growth over the next decade. With the government’s strategic focus on real estate and infrastructure development, the initiatives undertaken will greatly benefit the Indian electrical industry and RK Kabel to a large extent.
The company has cemented its position as one of the largest wire and cable players in the country and well poised to achieve greater heights. The company is improving its working capital requirements on sound financial management and also spending Rs 500 crores on capital expenditure which will be completed by the last quarter of FY25 helping it post healthy volume growth and higher margins. Apart from sectors like infrastructure, the other bigger growth areas that RR Kabel is exploring are railways, defense, solar, and alternative electrical manufacturing resources as all of them require wire and cables as a product. The management is also clearly upbeat and expects that the demand is going to be much higher than the supply in spite of the capacity building being undertaken by other large industry players.
The Indian wire and cable industry is well poised for strong growth with a significant shift happening in favour of large branded players . There are multiple long-term growth drivers such as EV transition, renewable energy, export promotion by the government, and rural electrification which the company is focusing on for higher growth in the future. The RR Kabel stock is currently quoted at Rs 1650 and analysts and fund managers are bullish on the scrip for long-term
price appreciation.