KEI Industries Q1 FY27 Earnings Call — Analysis (NSE: KEI)

KEI Industries delivers record operating margin of 13.04% and 40% PAT growth in Q1FY27, crossing the 11% margin hurdle and guiding for a sustained 11‑12% margin trajectory with >20% revenue growth.

10 Aug 2026 · Analysis by Alpha Inflection

Result quality: strong — Margin expansion. Management sentiment: optimistic.

The take

Q1FY27 Net sales ₹3,185 Cr ( +23% YoY ) . New guidance — FY27-FY29 consolidated revenue growth cagr more than 20% . New story: Margin re‑rating and operating leverage .

Results

Revenue ₹3,185 Cr +23% YoY; EBITDA margin 13.04% (+155bps YoY); PAT ₹274 Cr +40% YoY; domestic wire & cable +29% YoY; exports -9% YoY on Middle East and US disruptions.

Financial highlights

Guidance

FY27 revenue growth expected to exceed 25% (value terms), operating margin guided at 11‑12%, export share 17‑18%, Sanand revenue ₹1,500‑2,000 Cr; long‑term target of ₹25,000 Cr revenue by FY30.

What management committed to

• [KEI Industries] will grow revenue more than 20% per annum over the next 2 to 3 years. — more than 20%, FY27-FY29
• [KEI Industries] will operate in an EBITDA margin range of 11% to 12% for the coming year (FY27). — 11% to 12%, FY27
• [KEI Industries] will incur capital expenditure of approximately INR 600 Cr to INR 700 Cr annually for the next 3 to 4 years. — INR 600 Cr to INR 700 Cr annually, FY27-FY30
• [Sanand plant] will generate revenue of INR 1,500 Cr to INR 2,000 Cr in FY27. — INR 1,500 crores to INR 2,000 crores, FY27
• [Sanand plant's] extra high-voltage power cable project will be commissioned by March 2027. — Q4FY27
• [Sanand plant] will achieve 70% to 75% utilisation of its full capacity in the next financial year (FY28). — 70% to 75%, FY28
• [KEI Industries] will complete the Salarpur (Bhiwadi) LV/MV power cable factory within the next 2 years, spending ~INR 700 Cr. — INR 700 crores, FY28-FY29
• [KEI Industries'] export revenue will reach at least 17% to 18% of total revenue in FY27. — 17% to 18%, FY27
• [KEI Industries] will achieve consolidated revenue of INR 25,000 Cr by FY30. — 25,000, FY30

Key themes

Margin re‑rating and capacity‑led growth

How the narrative shifted

• Margin re‑rating and operating leverage: Management argues the 11% operating margin barrier is definitively crossed, with mix shift toward EHV, higher retail contribution and operating leverage sustaining margins in the 11‑12% range.
• Sanand greenfield ramp and capacity build: Sanand capacity ramp is labelled as slow but improving month‑on‑month; full capex benefits to manifest by FY28, with asset turns expected to improve from 3x to ~4x after balancing equipment.
• Export disruption and catch‑up narrative: Exports dipped in Q1 due to Middle East war and US customs issues, but shipments have resumed; management expects a strong rebound to meet the 17‑18% export share target for FY27.
• Capital allocation discipline and conservative guidance: Management repeatedly stresses capital allocation discipline and refusal to chase >25% growth, framing it as a long‑term sustainable philosophy rather than leaving growth on the table.
• Broad‑based domestic demand tailwind: Strong demand across power T&D, data centres, renewables, EVs, housing, and infrastructure is cited as the underpinning for >20% value growth; the demand is described as rotating but always present.
• Retailisation and mix shift toward D2C: D2C share rose sharply to 59% from ~51%, driven by lower working capital and branding; this mix shift is explicitly called out as a margin enhancer alongside EHV growth.
• Next leg of capex: Salarpur and annual cycle: A new LV/MV greenfield at Salarpur (~₹700 Cr) plus annual capex guidance of ₹600‑700 Cr illustrate an institutionalised capacity creation cycle aimed at sustaining 20%+ CAGR.

Operational commentary

• Sanand greenfield plant: Phase 1 (LV/MV power cable) commissioned, electron beam cable line added, 152-m EHV tower under construction; total project cost ₹2,000 Cr, ₹1,722 Cr spent, balance ₹300 Cr to be spent in FY27. Sanand capacity utilization at ~50% currently, expected to reach 70-75% in FY28, with revenue potential of ₹7,000 Cr after balancing equipment.
• New capex announced: Salarpur (Bhiwadi) greenfield project for LV/MV power cable, investment ~₹700 Cr over 2 years, part of annual capex plan of ₹600‑700 Cr for next 3‑4 years.
• Retail (D2C) share of domestic sales rose to 59% from ~51% earlier, driven by brand push, IPL advertising, and focus on lower working capital channels; active dealer count at 2,128.
• Export operations disrupted in Q1 by Middle East war (shipment stoppages) and US custom duty issues; shipments have resumed with higher freight costs, and US market is opening back up. Management expects exports to recover and reach 17‑18% of sales for FY27.
• EHV cable sales grew 47% YoY; EHV capacity being expanded in Sanand; management sees EHV contributing ~9‑10% of consolidated revenue once new capacity ramps up. Market size seen at >₹3,000 Cr, with competition from Universal Cable and imports.
• Debt‑free status maintained; QIP proceeds of ₹2,000 Cr largely utilized (₹1,785 Cr spent, ₹303 Cr remain including FDR interest); strong cash position supports capex and working capital.
• Management declined to provide product‑wise volume or segment split (house wires/LT/HT) citing competitive sensitivity, but qualitative outlook indicates broad‑based demand across power T&D, data centres, renewables, EV, and housing.

Analyst Q&A

• Q. What is the house wires / LT / HT cable breakup for the quarter?

  We cannot give that figure because now the competitor was using those numbers actually. So that's why we have decided not to go for individual product-wise number.

• Q. Is the current gross margin level sustainable given the sharp improvement?

  Now we are in the trajectory where we will operate 11% to 12% EBITDA margin ... the gross margin will be in this range. Sometimes volatility of 0.25% to 0.5% per quarter can happen, but for the full year it averages out.

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