KEI Industries Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Saumil Mehta - Kotak Mutual Fund - Analyst : Yeah, thanks for the opportunity, quick question from my side. While you mentioned the EHV segment had some weakness which in-- which was there even in Q2 and continue in Q3, when should we expect some sort of traction in this business? And was this weakness got to do with large domestic orders? I mean if you can give some color on this. How should we look at EHV segment going into FY26?

Question: Saumil Mehta - Kotak Mutual Fund - Analyst : So should we expect a meaningful step-up in terms of the specific business related to EHV going into '26 given FY25 will have a very favorable base?

Question: Saumil Mehta - Kotak Mutual Fund - Analyst : Okay, okay. And for this particular quarter, given copper prices are volatile, what was the volume growth? And if you can just broadly quantify the inventory losses, if there were any, for the quarter.

Question: Saumil Mehta - Kotak Mutual Fund - Analyst : Great. And sir, my last question, in terms of the retail business. Obviously it's showing traction, while I understand this will also include a wire business. Now from competitors, at least our inference is that the wire market is still very down, so what are we doing especially? Or are there any specific segments where we are growing meaningfully when it comes to our retail business? That's my last question. Thank you.

Question: Saumil Mehta - Kotak Mutual Fund - Analyst : Perfect. Thank you and all the best for future.

Question: Rahul Agarwal - kigai Asset Management - Analyst : Hi, sir. Good afternoon. Hope all is well. Sir, two questions. Firstly, if, I mean, you could talk about next year across segments. You talked about EHV, but if you could talk more on institutional sales, housing wire sales, exports, how do you see growth and margins for fiscal '26? That's my first question. Thank you.

Question: Rahul Agarwal - kigai Asset Management - Analyst : More specifically on exports and housing wires, how do you see growth there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 6:30AM, KEIN.NS - Q3 2025 KEI Industries Ltd Earnings Call

Question: Rahul Agarwal - kigai Asset Management - Analyst : Got it, sir. So this export order book right now, you said, was is about --

Question: Rahul Agarwal - kigai Asset Management - Analyst : Right. That is executable over what period?

Question: Rahul Agarwal - kigai Asset Management - Analyst : And how would that be for EPC and EHV order book, EHV 598 crores and EPC 554 crores?

Question: Rahul Agarwal - kigai Asset Management - Analyst : And EPC 554 crores.

Question: Rahul Agarwal - kigai Asset Management - Analyst : Perfect, sir. And last question, on creditors. Sir, if I look at KEI pre COVID to post COVID, consciously we have decided to pay creditors faster. Earlier, we used to be like 120 days of COGS. Right now we're almost half to 60 days, which is very good. I just wanted to understand. The benefit of this is reflected purely in interest cost savings. Or should we look at.

Question: Rahul Agarwal - kigai Asset Management - Analyst : Perfect, sir. So it should -- does it reflect any benefits on the margins also, gross margins or EBITDA margins?

Question: Rahul Agarwal - kigai Asset Management - Analyst : Perfect, very clear and all the best for 2025. Thank you. Thank you.

Question: Natasha Jain - PhillipCapital - Analyst : Thank you for the opportunity. Sir, my first question is on -- is a continuation of what Saumil asked. So in terms of EHV now, I understand there had been delay in clearances execution, but now this is no more a 1-quarter phenomenon. We've seen this for almost the entire year for FY '25, so just want to understand. What is the fundamental reason behind these delays. Are projects getting canceled? Or if you could throw some light on that, firstly.

Question: Natasha Jain - PhillipCapital - Analyst : Understood. Sir, the reason I was asking is because, even though, like you said, you just want to fungible use the capacity, it does impact our EBITDA. Sir, having said that, in fourth quarter, the fourth quarter, the ongoing quarter, has clearances come through? Or is there still a execution delay that's happening on the ground?

Question: Natasha Jain - PhillipCapital - Analyst : Understood, sir. And my second question is broadly on the domestic market for wires and cables. Now we're entering the seasonal quarter, so can you just throw some light as to how the order book is looking like for the current quarter and a little bit sense on export as well for the current quarter?

Question: Natasha Jain - PhillipCapital - Analyst : Understood. So, thank you, I'll get back in the queue.

Question: Pranay Sahay - Prabhudas Lilladher Capital - Analyst : Yeah, hi sir. My first question is related to the your guidance for a FY26. You had given a 11% of EBITDA margin for F2Y6. So is that because of EHV expected to improve? That is the one reason. On account of that, you are saying. Or something else as well to read through.

Question: Pranay Sahay - Prabhudas Lilladher Capital - Analyst : Yeah, really helpful, sir. Second thing, on your CapEx for this year and the next year, if -- financial year's numbers, if you can give. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 6:30AM, KEIN.NS - Q3 2025 KEI Industries Ltd Earnings Call

Question: Pranay Sahay - Prabhudas Lilladher Capital - Analyst : Right, sir. Last question, sir, related to the -- maybe it's a repetition, but it's related to the wire volume. And already you had said that there are a lot of retail activity, which led to the improvement in your numbers, but if I look at the entire nine month, the past quarter or even the Q1, for industry, we have seen quite soft numbers. But your numbers are still way ahead of industry, so is that a market share gain you are getting in? And if you can, some color more on the from which segment of the wire you are getting in.

Question: Pranay Sahay - Prabhudas Lilladher Capital - Analyst : All right, sir. Got it. Thank you and all the best.

Question: Shrinidhi Karlekar - HSBC Securities - Analyst : Yeah, hi. Thank you for the opportunity and congratulations on the impressive growth rates. Sir. Would it be possible to comment on which end markets are driving very strong growth for you as well as outlook for the domestic institution.

Question: Shrinidhi Karlekar - HSBC Securities - Analyst : Right. And sir, would it be possible to give some color in terms of breakout? How much of your business is actually coming from the solar and the power distribution end market?

Question: Shrinidhi Karlekar - HSBC Securities - Analyst : Yeah. And sir, second question is there are a lot of HVDC projects being announced. I'm just wondering. The EHV cable business benefits from these HVDC project spends.

Question: Shrinidhi Karlekar - HSBC Securities - Analyst : Right. And Rajeevji, one question on depreciation and amortization expenses. Given new plants are coming up in phased manner, would it be possible to guide us on what we should build in our model for the next financial year depreciation and the following year depreciation expenses?

Question: Shrinidhi Karlekar - HSBC Securities - Analyst : '27. And would you have some numbers, sir, what should we build? Or...

Question: Shrinidhi Karlekar - HSBC Securities - Analyst : Yeah. And sir, last one -- yes, yes. Last one, if I may: On the cable and wire export business, the 30% growth that you alluded for the cable and wires part, which countries has driven that?

Question: Shrinidhi Karlekar - HSBC Securities - Analyst : And sir, what are typical freight costs when you export to US particularly?

Question: Shrinidhi Karlekar - HSBC Securities - Analyst : 8% to 10% of sales, sir.

Question: Shrinidhi Karlekar - HSBC Securities - Analyst : Okay. Yeah, thank you for answering my question and all the best.

Question: Bharat Shah - ASK Investments Manager Limited - Analyst : One fundamental long-term growth issue that we were seeking to address in a particular way earlier -- at a steady 15%, 16%, 17% kind of growth, at which we've relentlessly chugged along for a long period of time. And now we are very clear. I presume and judge from the various statements that 20% kind of close to 20% kind of volume growth is something on a more sustained basis over a period of time through various strategic initiatives would be very predictable and strong outcome. Is this something, apart from being strategic intent, a very strong reality as you see it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 6:30AM, KEIN.NS - Q3 2025 KEI Industries Ltd Earnings Call

Question: Bharat Shah - ASK Investments Manager Limited - Analyst : Thank you. But -- so that's now is a clear reality that we see. And -- not nearly is a strategic priority, but at an operational level, we see it as a clear reality either through product portfolio, capacity expansion, focus on exports and approvals needed or specific portfolio needed for exports or people at ground level because we'll need to strengthen the manpower team. Finance, of course, we have strengthened with QIP that we did. So all strategic inputs are now in place to drive that growth, apart from the clearly opportunity being there, so can we say that all the pieces in which can make that outcome happen now are firmly in place?

Question: Bharat Shah - ASK Investments Manager Limited - Analyst : Sure, sure. And as we get into this journey of accelerated growth, compared to decent 15%, 16% kind of a growth that we've constantly done which is basically doubling every 5 years. Instead, at 20% plus, then we are essentially doubling in less than 4 years time. Our margins logically should improve. And return on capital employed also should logically improve because the exports produce better margins. Our EHV drive will produce better margins, also upgradation of the product portfolio, logically, and operating leverage. So all of these levers put together, not only the top line growth at an accelerated level, but steady and clear improvement in margins is something now a very clear reality rather than these 10% to 11% band that we seem to be in for a length of time.

Question: Bharat Shah - ASK Investments Manager Limited - Analyst : Yeah. So from '27, '28, Rajeevji, about 12.5%; and further improvement thereafter as we progress. Until '27, what kind of margin improvement can be envisaged?

Question: Bharat Shah - ASK Investments Manager Limited - Analyst : And improve thereafter as we chug along.

Question: Bharat Shah - ASK Investments Manager Limited - Analyst : Okay, Fantastic. And Rajeev ji, last thing: Return on capital employed also will improve as we move ahead...

Question: Bharat Shah - ASK Investments Manager Limited - Analyst : Okay, thank you and all the very best. Thank you.

Question: Naushad Chaudhary - Aditya Birla Mutual Fund - Analyst : Yeah, hi. Thanks for the opportunity, just one clarification, sir. We understand the EHV is a better margin product and would be a growth driver. but looking at from the overall business economics point of view in terms of overall trade terms in terms of the length of the contract in this business versus our base business and given the kind of the raw material we deal with, don't we think incrementally, from a business economics point of view, volatility point of view, we are heading incrementally it will be slightly weaker versus what we have today in the terms of overall business because the within your.

Question: Naushad Chaudhary - Aditya Birla Mutual Fund - Analyst : We understand and appreciate that, sir, but just and I understand, from a growth point of view, we have to be in all the products, but it was just a clarification That given a choice of if you get decent growth in your base business, would you still be -- I know we have to do EHV, but from an understanding point of view, would you rate your base business economics are much better than versus the EHV business?

Question: Naushad Chaudhary - Aditya Birla Mutual Fund - Analyst : Yeah, I take your point, sir, of growth and EBITDA margin should improve, but because of the EHV thing, do you think the volatility in the business going forward should increase because of the... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 6:30AM, KEIN.NS - Q3 2025 KEI Industries Ltd Earnings Call

Question: Naushad Chaudhary - Aditya Birla Mutual Fund - Analyst : All right.

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Thank you for the opportunity, sir. Just a couple of questions. One, if you could talk about, since we are on the topic of margins, just a broad sense what typically are the margins for exports in terms of cables when it goes through the distribution channel, what margin if it goes through institutional. Just a ballpark range or stacking of the margin. Which is the highest margin, and which is the lowest margin? If you could give some order, that will be very helpful.

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Fair point, sir. And I presume, when you're talking about the export, retail LT, HT margins, et cetera, these are excluding the other income. Is my understanding right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 6:30AM, KEIN.NS - Q3 2025 KEI Industries Ltd Earnings Call

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Absolutely makes sense, sir, makes sense. The second question I had, in terms of the -- so one is the Sanand plant. You've already talked about potential revenue of 5,500 crore to 6,000 crore. How about the next round of expansion to achieve the 25,000 crore revenue? If you could give some sense on that as well.

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Understood. This is very helpful, sir. And just last question: How much of the cables go through the distribution channel as of now? And how do you see it evolving?

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Understood. That's great, sir. I I'll get back in the queue. Thanks.

Question: Akshay Gattani - UBS - Analyst : Hi. Thank you, sir.

Question: Akshay Gattani - UBS - Analyst : Yes. I am on handset. Is it clear?

Question: Akshay Gattani - UBS - Analyst : Yes. So my query is on export business. Which products do you sell in export market? And you have talked about export business margin, but with EHV capacities coming up by end FY26 so does this open opportunities for EHV export as well, like, from a meaningful perspective?

Question: Akshay Gattani - UBS - Analyst : Got it, sir. And margins on EHV export are higher than domestic EHV sale? Or they are broadly similar. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 6:30AM, KEIN.NS - Q3 2025 KEI Industries Ltd Earnings Call

Question: Akshay Gattani - UBS - Analyst : Got it. That's all from my end. Thank you.

Question: Vidit Trivedi - Asian Markets Securities - Analyst : Thank you, sir. All the questions have been answered. Just one clarification: Did you say the volume growth is 19% for this quarter?

Question: Vidit Trivedi - Asian Markets Securities - Analyst : Thank you, sir.

Question: Natasha Jain - PhillipCapital - Analyst : Yeah, thank you for the opportunity. Again, sir. In terms of exports, can you call out what is your percentage contribution from US in your total exports?

Question: Natasha Jain - PhillipCapital - Analyst : Okay. And sir, the sharp increase of it's good to know that, from 200 crores, you're moving up to 500 crores, but given the current stance of the current government in the US, any risks, sir, in terms of supplying cables to the US market? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 6:30AM, KEIN.NS - Q3 2025 KEI Industries Ltd Earnings Call

Question: Natasha Jain - PhillipCapital - Analyst : Got it, but then at least you do not see any risk in terms of any slowdown. The market looks robust for you.

Question: Natasha Jain - PhillipCapital - Analyst : Understood, sir. And just one feedback that we have got: Sir, while the product has been very, very well accepted by the channels just that the replenishment cycle of the product is a little longer than the peers. I know you're expanding your channel. So that's deeply appreciated. So just this feedback.

Question: Natasha Jain - PhillipCapital - Analyst : Understood, sir. Thank you and all the best.