Motilal Oswal Targets Rs 2020 for Neutral RR Kabel
Motilal Oswal Raises Estimate for RR Kabel Amid Steady Demand
Motilal Oswal's research report on RR Kabel highlights a mixed outlook for the company, with healthy demand across key end-user segments offset by the ongoing crisis in West Asia. Despite the challenges, RR Kabel expects its margins to remain stable, supported by effective cost pass-throughs.
The company is focused on scaling its cables and export businesses through its INR 12 billion capex and expansion into higher-voltage segments. While exports have been impacted by the Middle East crisis, RR Kabel expects the impact to gradually normalize over time. In the near term, revenue growth is expected to be largely price-led, fueled by elevated copper and aluminum prices and subsequent price hikes.
The FMEG (Fast Moving Electrical Goods) segment remains in an investment phase, with RR Kabel expanding its presence in kitchen appliances and premium product categories. Management continues to target breakeven in the FMEG segment by FY 2027.
Motilal Oswal Increases Estimate for RR Kabel
Given the higher RM prices and better margins in FY 2026, Motilal Oswal increases its EPS estimate for RR Kabel by 9% and 12% for FY 2027 and FY 2028, respectively. The research firm reiterates its Neutral rating on the stock with a target price of INR 2,020, based on 30x FY 2028 EPS.
| FY 2027 | FY 2028 |
|---|---|
| 9% increase in EPS estimate | 12% increase in EPS estimate |
Investor Takeaway
RR Kabel's near-term growth is expected to moderate due to the ongoing crisis in West Asia, but the company remains focused on scaling its cables and export businesses.
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