Prabhudas Lilladher Recommends Buying RR Kabel, Targets Price at Rs 1964

RR Kabel Posts Strong Q4FY26 Performance, Guides for Future Growth

RR Kabel, a prominent player in the cables and wires industry, has reported a strong performance in its fourth quarter of fiscal year 2026 (Q4FY26). The company's revenue grew by 33.7% year-over-year (YoY) to INR 29.6 billion, driven by robust domestic demand and healthy exports despite global disruptions. This growth was primarily fueled by a 10% increase in volume, with cables experiencing high-teens growth and wires showing single-digit growth.

RR Kabel's exports continued to perform well, with volumes outpacing domestic volumes during the quarter. The company's export performance remained strong, with a 33% growth in fiscal year 2026 (FY26). However, near-term headwinds are expected due to geopolitical tensions, particularly in the Middle East, which accounts for approximately 40% of FY26 exports.

The company's management has reiterated its margin expansion trajectory, targeting a 300-basis-point (bps) widening of the working capital (W&C) EBIT margin to 9.5% in FY27 and 10.5% by FY28. Additionally, RR Kabel has guided for 16-18% volume growth in FY27. The company's capital expenditure (capex) of INR 12 billion planned over FY26-28 remains on track, with INR 3.5 billion already incurred in FY26. The majority of this capex is expected to be spent in FY27, along with phased cable capacity additions.

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The company's FMEG (Fast Moving Electrical Goods) segment has delivered steady growth, driven by improving operating efficiencies, which has led to a gradual reduction in losses. Continued investments in distribution and brand building are expected to help the segment move towards breakeven in the near term, with a target value growth of 20-25% in FY27.

Key Highlights

We estimate RR Kabel's revenue, EBITDA, and PAT compound annual growth rate (CAGR) to be 17.8%, 21.5%, and 21.4%, respectively, over FY26-28E. We have upward revised our FY27/FY28 earnings estimates by 8.2%/8.5%, factoring in strong cable volume growth and W&C margin expansion supported by operating leverage.

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Based on our revised estimates, we maintain a 'BUY' rating for RR Kabel with a revised target price of INR 1,964 (earlier INR 1,844) based on 30x Mar'28 earnings.