Neutral R R Kabel; target of Rs 1430: Motilal Oswal

Motilal Oswal's research report on R R Kabel

We attended the plant visit event organized by R R Kabel (RRKABEL) at its Waghodia plant in Gujarat, where we interacted with the senior management team, followed by a tour of the plant. Key highlights from the interaction are as follows: 1) the company holds ~6% market share in domestic cables & wires (C&W) and exports to over 74 countries (with Israel recently added to the list); 2) a higher share of in-house manufacturing for key raw materials drives strong backward integration; 3) it has planned capex of INR12.0b spread over the next three years to expand its cable capacity, supporting ~18% CAGR in C&W revenue during this period; and 4) better product mix (increase in cables share) and scale improvement are expected to expand margins.

Outlook

We estimate RRKABEL’s revenue/EBITDA/PAT CAGR at 15%/22%/19% over FY25- 28. We estimate its C&W segment margin at 7.8%/8.0%/8.2% in FY26/FY27/FY28 vs. 7.4% in FY25. We project the net debt (excluding acceptances) to increase to INR8.6b by FY28 vs. INR1.1b in FY25, led by higher capex. The stock is trading fairly at 36x/32x FY26E/27E EPS. Reiterate Neutral with a TP of INR1,430

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