KEI Industries-Q3 FY26 Earnings Conference Call net profit rose 42.5%

KEI Industries Delivers Strong Profit Jump in Q3 FY26 as Margins Expand and Exports Surge

KEI Industries put up a solid show in the December quarter of FY26. Revenue climbed 19.5% year-on-year to ₹2,954 crore, while EBITDA jumped 39% to ₹354 crore and net profit rose 42.5% to ₹235 crore. The real standout was margin improvement EBITDA margin widened to around 12% from 10.3% a year earlier.

Exports led the charge with a massive 95% growth to ₹544 crore, showing the company’s push into overseas markets is paying off. Domestic B2C (distribution network) sales grew 29% and now make up 55% of the mix, up from 50% last year.

Management sounded confident. They guided for full-year growth of 20% plus, expect better operating margins in FY26, and reaffirmed a more than 20% CAGR over the next three to four years once the big Sanand plant is fully running. The order book stood at a healthy ₹3,928 crore as of December 31, 2025.

The market reaction was mixed shares dipped around 3% on the day results came out, possibly because revenue came slightly below some street estimates even as profits beat expectations. Overall, this looks like a quarter where execution was strong, especially on profitability and export momentum.

TVS Motor -Q3 FY2026 Earnings Conference Call Analysis

Key Financial Highlights

• Net Sales (Q3 FY26): ₹2,954 crore up 19.5% YoY (from around ₹2,472 crore)
• EBITDA (Q3): ₹354 crore up 39% YoY (from ₹254 crore)
• EBITDA Margin: ~12% vs 10.3% YoY clear expansion
• Profit After Tax (PAT): ₹235 crore up 42.5% YoY (from ₹164 crore)
• PAT Margin: 7.95% vs 6.67% YoY
• Nine-Month (Apr-Dec 2025):
  • Net sales: ₹8,271 crore up 21.3%
  • EBITDA: ₹963 crore up 33%, margin 11.64%
  • PAT: Around ₹634 crore (implied from margin), margin 7.67%

The profit growth outpaced revenue thanks to better product mix (more exports and high-margin institutional cables) and operating leverage.

Operational and Segment Breakdown

KEI splits its business mainly into institutional cables (B2B), B2C wires/cables through dealers, exports, EPC projects, and some industrial wires.

Q3 Snapshot:

• Domestic institutional cables (wires & regular cables): ₹592 crore
• Domestic extra-high voltage (EHV) cables: ₹127 crore
• Exports: ₹544 crore 95% growth, a huge driver
• B2C (distribution): ₹1,612 crore 29% growth, now 55% of total (up from 50%)
• EPC (non-60 crore base): Around ₹60 crore (similar to last year)
• Industrial wires: ₹53 crore (down from ₹64 crore)

Nine-Month View:

• Domestic institutional cables: ₹1,884 crore
• EHV: ₹371 crore
• Exports: ₹1,390 crore 79% growth
• B2C: ₹4,413 crore 23% growth, 53% contribution
• Total institutional cable contribution: 42% (slightly up from 41%)
• Order book (Dec 31, 2025): ₹3,928 crore EPC ₹361 crore, EHV ₹717 crore, domestic cables ₹2,426 crore, exports ₹424 crore

Exports and B2C are clearly gaining share. Institutional sales (domestic + export) remain the backbone, but B2C’s faster growth shows strength in retail/housing demand.

Management Commentary and Strategic Direction

Chairman & MD Anil Gupta kept the tone upbeat and focused on execution.

He highlighted KEI’s position in high-voltage cables: first Indian company to supply 330 kV cables to Australia, 220 kV to UAE and Spain, and the only Indian firm qualified for National Grid UK’s framework up to 400 kV. In the Middle East, KEI has a key 132 kV contract and is building acceptance. Domestically, it supplies the full solar power chain, including Reliance’s Polysilicon plant in Jamnagar.

On the big Sanand expansion (Gujarat):

• Trial production for LT/HT started in December 2025
• Electron beam cured solar wires expected by April 2026
• Medium voltage ramp-up by July-August 2026
• EHV facilities by March 2027
• Full plant completion next financial year (FY27)

Total CapEx planned around ₹2,000 crore for Sanand. Management expects this to drive ₹6,000 crore incremental topline by FY29, with 3-3.5x asset turns. Depreciation starts phased, full load only in FY28, but by then topline from Sanand alone could near ₹5,000 crore.

Gupta stressed natural hedging for copper/aluminum no financial hedges, just inventory (2.5-3 months on floor + transit) matched against 3-4 months pending institutional orders. Most metal bought domestically in rupees from Hindalco/Vedanta.

Guidance and Outlook

• Full-year FY26: 20% plus revenue growth (nine months already at 21%)
• Q4 FY26: Management sees 25% plus growth (helped by copper price rise)
• Volume growth expected 16-18%, rest from input-led price increases
• EBITDA margin: Aim for around 11% overall in FY26; further 100 bps improvement over two years
• Long-term: More than 20% CAGR in next 3-4 years post-Sanand full ramp-up

The guidance feels measured. They could have gone higher given Q3 momentum and exports, but they pointed to copper volatility and the need to quantify better. Still, the multi-year 20%+ CAGR outlook looks ambitious yet backed by the order book and new capacity.

Positives to Watch

• Export momentum 95% Q3 growth, 79% in nine months; strong acceptance in Australia, UK, UAE, Middle East
• Margin expansion Already up sharply; higher export and EHV mix helps
• Sanand ramp-up Phased but clear timeline; big potential for scale and higher-margin products like EHV and solar wires
• Solid order book ₹3,928 crore provides visibility, especially in domestic cables (₹2,426 crore) and EHV (₹717 crore)
• B2C strength Consistent 22-23%+ annual growth in wires; retail price adjustments quick (every 15 days)

Risks and Concerns

• Revenue slightly missed some estimates Led to initial share price dip despite profit beat
• Copper price swings Sharp December rise helped, but volatility can pressure if not passed on fully (though management says retail adjusts fast)
• CapEx execution ₹2,000 crore spend is large; any delay in Sanand commissioning could push out growth
• Depreciation impact Phased but will hit fully in FY28; needs topline to grow in step
• Institutional sales share Dipped slightly to 41% in Q3 (from 45%); if B2C slows, it could matter

Capital Allocation

CapEx in nine months: ₹928 crore (Sanand ₹769 crore, land buys, machinery). Another ₹200 crore this quarter, balance next year. Total Sanand spend so far ₹1,353 crore.

No mention of dividends in the call snippet, but results coverage noted an interim dividend of ₹4.50 per share declared. Focus remains on growth CapEx over buybacks or large payouts.

Broader Challenges

• Rising input costs Copper up sharply; management passes through but timing lags can create short-term noise
• Competition in cables/wires Many players; KEI differentiates via EHV qualification and export reach
• Global demand Exports strong now, but any slowdown in solar/infra in key markets (Australia, Middle East) could hurt
• Working capital Active working capital at ₹2,114 crore as of Dec 2025; large but tied to growth

Analyst Q&A Insights

Question: Detailed Sanand ramp-up plan over next few years, product sequence, and peak sales potential?

Answer: Trial production for LT/HT started December; ramping January-March. Electron beam solar wires by April. Medium voltage by July-August. EHV by March 2027. Full project complete next financial year.

Our take: Clear phased timeline gives visibility. Confirms ₹6,000 crore incremental topline by FY29 looks realistic if execution stays on track.

Question: CapEx capitalization and depreciation schedule for Sanand?

Answer: Around ₹550 crore capitalized so far. Balance as machinery starts (April, July-Aug). Full by March 2027. Land cost ₹140 crore (excluded from depreciation base). Depreciation phased, full load only FY28 (~₹100 crore annual at 5%). But topline from Sanand alone near ₹5,000 crore by then.

Our take: Management is transparent on phasing no big one-time hit. Ties depreciation to revenue ramp, which is sensible.

Question: Why conservative full-year 20%+ guidance despite strong nine months and copper rise?

Answer: Q4 should see 25% plus growth. Volume 16-18%, rest from input price inflation. Trying to quantify better.

Our take: Sounds cautious but realistic. They prefer under-promise after copper volatility.

Question: Hedging policy for metals? Any benefit from low-cost inventory this quarter?

Answer: No financial hedging natural hedge via inventory (2.5-3 months floor + transit) vs 3-4 months pending orders. Mostly domestic rupee buys. Quarterly swings possible (0.5-1%) from price moves, but full-year margin improves from mix and scale.

Our take: Classic commodity player approach. Explains steady margins despite copper spikes.

Question: Channel inventory in wires? Margin outlook for wires in Q4?

Answer: Wiring segment growing 22-23% year after year will continue full year.

Our take: No red flags on channel stuffing; retail demand seems healthy.

Question: Raw material inflation last quarter and pass-through? Retail price hikes amid copper rise?

Answer: Old orders served with old inventory; retail prices adjust every 15 days. In last two months, wire prices up ~15%, cables ~10% (major from December). Everything passed on.

Our take: Quick pass-through in retail is a strength. Institutional side has longer lag but matched by inventory.

KEI Industries looks well set. Exports firing, margins improving, and Sanand adding serious scale over the next couple of years. Guidance is achievable, and the long-term 20%+ CAGR story has legs if execution holds. Investors who like growth in India’s power and infra space will find plenty to like here.