KEI Industries Ltd Q4 2025 Earnings Call Transcript

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

Question: Praveen Sahay - Prabhudas Lilladher Capital - Analyst : Congratulations for a good set of numbers. My first question is related to the volume growth. And this is a clarification. In the Q4, you had said 21% of volume growth in the Wire and Cable segment, you had reported. That is including domestic and international. Is it correct?

Question: Praveen Sahay - Prabhudas Lilladher Capital - Analyst : So if you give a bifurcation.

Question: Praveen Sahay - Prabhudas Lilladher Capital - Analyst : Okay. And how is the domestic market has done, in terms of volume?

Question: Praveen Sahay - Prabhudas Lilladher Capital - Analyst : Right, sir. Or if you can give some more color on your export number Because that has grown quite -- very strongly. Is that a one-off element attached to that? And, also, if you can add, is that the benefit of a US tariff -- you received certain things?

Question: Praveen Sahay - Prabhudas Lilladher Capital - Analyst : Right, sir. Got it. Second question, sir, related to the EHV, that's INR400-odd crore of revenue we had done. And, the way forward, I believe the guidance is of INR600-odd crore. So how you are going to see this EHV business, the way forward, because your capacity at Sanand is also coming up? In the next two to three years, if you can give some guidance related to the EHV -- would be helpful.

Question: Praveen Sahay - Prabhudas Lilladher Capital - Analyst : Okay. And just related to that: even the export has gone up more. This quarter, we had seen that the LME prices were also up. But that's not reflecting in the margin front, actually. So if I look at your margin, the gross margin has been, Y-o-Y -- it's quite 1% down. What factors lead to that?

Question: Praveen Sahay - Prabhudas Lilladher Capital - Analyst : Sir, what I believe is if there is an improvement uptrend in the LME prices, there would be some gain, also, you absorb. And the second is: the export business, if that is increasing, that is a high-margin business. So why not our gross margin reflected these two factors in this quarter?

Question: Praveen Sahay - Prabhudas Lilladher Capital - Analyst : Thank you, sir. If you can give the CapEx number for '26-'27, it would be helpful.

Question: Bharat Shah - ASK Investment Managers - Analyst : Anil talked about 17% to 18% growth rate, with improvement in margins. Is that a reference to the upcoming financial year 2025-2026 or for the longer term? Because on the longer term, I thought, with the increase in capacity, we are aiming for growth upwards of 20%?

Question: Bharat Shah - ASK Investment Managers - Analyst : That, you've clarified. For a moment, I thought (spoken in foreign language) --

Question: Bharat Shah - ASK Investment Managers - Analyst : That clarifies. Just one last thing. Rajeev, the margin improvement journey over a period of time, due to variety of factors that we have discussed many a times, that is intake, right?

Question: Akshay Gattani - UBS - Analyst : My question is on the export side of business. How is US market shaping up, post-tariff announcement? Like, have you seen any temporary pause in the consignment? Also, how do you see US geography, from a longer-term perspective, in terms of product approval and product acceptance there?

Question: Akshay Gattani - UBS - Analyst : Sorry, Rajeev, I think we lost you for 30 seconds.

Question: Vidit Trivedi - Asian Market Securities - Analyst : Congratulations on the great set of numbers. Could you please tell me what's your mix -- I mean, how much do you export to the US, of the overall exports? And second: Coming to the EHV cable side, it has dropped sharply. What was the main reason of the contraction? And when do we see the recovery happening?

Question: Vidit Trivedi - Asian Market Securities - Analyst : Okay. And what's the US share?

Question: Naushad Chaudhary - Aditya Birla Mutual Funds - Analyst : Just one clarification, sir. During FY25, the key raw materials, copper and aluminum, on a low base; it were up 13%, 15% in [INR] terms. And on that, on a blended basis, if I see, our revenue was up 20%. So with reverse and very rough calculation, roughly 10%, 11% would have come from the value growth. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 8:30AM, KEIN.NS - Q4 2025 KEI Industries Ltd Earnings Call And, now, as the copper and aluminum both are softening -- at least for now -- based on March closing, considering this fact, is there any risk to our guidance of 17%, 18% for FY26, given the direction of the (multiple speakers) --

Question: Naushad Chaudhary - Aditya Birla Mutual Funds - Analyst : Okay, sir. Second: Do we quantify the inventory gains, if any?

Question: Shrinidhi Karlekar - HSBC - Analyst : Congratulations on great set of numbers. Sir, just a couple of questions on export business. Last year, we have had a INR1,260 crore export business, right? And you said INR160 crore was US. Is that right?

Question: Shrinidhi Karlekar - HSBC - Analyst : Okay. Sir, my second question on that is: What are our principal competitors in the non-US markets? Like, are these local companies or are these global companies? Or we face more of competition? This, I'm talking about non-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. MAY 07, 2025 / 8:30AM, KEIN.NS - Q4 2025 KEI Industries Ltd Earnings Call

Question: Shrinidhi Karlekar - HSBC - Analyst : Right, sir. And sir, second: I'm a bit confused on your margin guidance for the next two years. Would it be possible to quantify how much of EBITDA margin improvement one should build for the next two years?

Question: Shrinidhi Karlekar - HSBC - Analyst : But not in '26-'27, is it, sir?

Question: Shrinidhi Karlekar - HSBC - Analyst : Okay. And sir, when you refer to EBITDA margin, you refer to EBITDA margin, including order income, which I think last year, we did like (multiple speakers) --

Question: Shrinidhi Karlekar - HSBC - Analyst : Including all things, yes. And sir, last question I have is, sir, I want to understand the HT cable business that we have, of about INR2,000-odd crores, what are largest end markets for that, for the HT cables?

Question: Kunal Sheth - B&K Securities - Analyst : My question has been partly answered. This was about margin only. But sir, just one clarification. Initially, we were talking about small margin improvement every year, about 20 bps, 30 bps. Has anything changed there, sir? Because, now, we are talking about margin improvement in '27 and not in '26?

Question: Natasha Jain - PhillipCapital - Analyst : My first question is: How does the pricing work? Is it per kg basis or percentage of raw material price?

Question: Natasha Jain - PhillipCapital - Analyst : Understood. And sir, my second question is more industry based. So, now, that most of the major players of wires and cables results have been out, we have seen that there has been strong top-line growth, which is warranted because fourth quarter was a seasonal quarter. But then, margin expansion has not happened. So is it fair to deduce that most of the benefits that the industry is going to get is out of scale and there may not be pricing advantage?

Question: Nikhil Purohit - Fident Asset Management - Analyst : My first question is: What is the margin differential in the domestic versus export markets for Wires and Cables?

Question: Nikhil Purohit - Fident Asset Management - Analyst : Got it. Okay. And additionally: Do we stick to our earlier guidance of exports to the US in FY26 being around [$5 billion]? I think this year, it was [$2 billion] (multiple speakers) --

Question: Nikhil Purohit - Fident Asset Management - Analyst : I understand. Okay. And lastly, just one last question. What was the EHV execution this quarter?

Question: Nikhil Purohit - Fident Asset Management - Analyst : Yes. Quarter-four FY25.

Question: Priyank Chheda - Vallum Capital - Analyst : Sir, sorry, I would have missed out the volume numbers for this quarter and for the full year -- if you can help me. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 8:30AM, KEIN.NS - Q4 2025 KEI Industries Ltd Earnings Call

Question: Priyank Chheda - Vallum Capital - Analyst : Perfect. And sir, in your opening commentary, you did mention solar, coal, transmission, data centers, and EV. These are the core key sectors contributing to the volume growth. Would it be possible to -- is there -- (multiple speakers) --

Question: Priyank Chheda - Vallum Capital - Analyst : Is there any big divergence or any one particular sector contributing to a very high incremental growth versus others?

Question: Priyank Chheda - Vallum Capital - Analyst : Would it be possible to quantify anything, in any way?

Question: Priyank Chheda - Vallum Capital - Analyst : And given the installations of solar, which is likely to drop versus significant installations that have happened in this year, anything that you would think that would be compensated by some other sectors? Any view on that?

Question: Priyank Chheda - Vallum Capital - Analyst : Got it. And sir, just last thing to clarify, you did mention that you work on a cost-plus model. And when we see the gross margins slightly drifting down from 25% to 23.5% -- is because the copper prices are higher and the realizations are higher; and, hence, the percentage margins are lower, right? Is that the way to read?

Question: Rahul Agarwal - Ikigai Asset Management Company - Analyst : Sir, a couple of questions. Firstly, are we seeing higher employee attrition? I think the industry is going through a lot of CapEx; cable and wire is becoming very attractive for skilled jobs (multiple speakers) --

Question: Rahul Agarwal - Ikigai Asset Management Company - Analyst : Yeah. Sure. But are you seeing attrition in your company?

Question: Rahul Agarwal - Ikigai Asset Management Company - Analyst : Okay. Good. And then second question was on working capital. I think somebody previously asked, just wanted to clarify. Obviously, the operating cash flow generation number looks lower because you're paying payables faster. And this process actually started pretty long back, right? We've been doing that for a very long time. My sense was that ultimately, if you pay payables faster, there has to be some savings on interest; wherein you have a lesser non-fund based credit. Is that correct? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 8:30AM, KEIN.NS - Q4 2025 KEI Industries Ltd Earnings Call

Question: Rahul Agarwal - Ikigai Asset Management Company - Analyst : Agree, sir. So the interest savings should reflect somewhere in operating cash flow, right?

Question: Rahul Agarwal - Ikigai Asset Management Company - Analyst : (spoken in foreign language)

Question: Rahul Agarwal - Ikigai Asset Management Company - Analyst : Yeah. So when I look at consol cash flow -- I'll explain, sir: when I look at consol cash flow, the payable swing is about INR314 crores and INR130 crores -- about NR430 crores. That's the swing from the --

Question: Rahul Agarwal - Ikigai Asset Management Company - Analyst : Absolutely right. So what is the benefit of that? We have discussed this in the past. My sense is (multiple speakers) --

Question: Rahul Agarwal - Ikigai Asset Management Company - Analyst : Where will that get reflected? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 8:30AM, KEIN.NS - Q4 2025 KEI Industries Ltd Earnings Call

Question: Rahul Agarwal - Ikigai Asset Management Company - Analyst : (spoken in foreign language) So you mean that operating cash flow, whatever is getting disclosed -- is not the right way to look at it, right? That's what you mean?

Question: Rahul Agarwal - Ikigai Asset Management Company - Analyst : Is that the intention, going forward?

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Yes, sir. Just a couple of questions. First, on the Wires. I think in the entire conversation, we have not really touched upon that part. It's growing very well, compared to the peers who are struggling with the growth. So you want to elaborate a little bit what are we doing here, in terms of the distribution expansion, in terms of the growth there? Any particular region, which is driving growth and the outlook?

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Okay. And if you could also highlight in terms of the channel financing, where are we -- how much of our sales we are able to -- of the dealer distributors are channel financed? And how do you see that trajectory moving?

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Right. And when you say 70% of sales, you (technical difficulty) dealer distributors?

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Understood. And that cash discount for those channel finance sales is obviously netted off in the gross margins, right? So gross margins are after that?

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Understood. And this 70%, any target you have in mind, sir? Will it be, like, 90% (inaudible) or anything of that sort? Hello?

Question: Achalkumar Lohade - Nuvama Institutional Equities - Analyst : Understood. And the second question, if I may: a quick summary of what you're saying is essentially you will utilize the capacity fully, that should drive 18% revenue growth. And the margins, because of EHV and wires, should improve. But because of the new capacity-related expenses, the margins are expected to remain stable. Have I understood right, sir?

Question: Ankit Soni - Sharekhan Mirae Asset - Analyst : Congratulations on a good set of numbers. Just one question from my side. Once your Sanand facility is operational, what time would we take to get on to a full optimum utilization of the facility so that we can fetch that logistics benefit, which you are, right now, triggering to? And what would be the margins jump after the capacity -- after reaching optimum capacity utilization?

Question: Ankit Soni - Sharekhan Mirae Asset - Analyst : So a follow-up on that would be like we'll be taking around three years to fully -- optimally, like, 70%, 80% capacity utilization, from that particular Sanand facility. Am I right?

Question: Shrinidhi Karlekar - HSBC - Analyst : Sir, would it be possible to comment on how much of your domestic institutional business, of about INR3,100 crore, comes from the power sector?

Question: Shrinidhi Karlekar - HSBC - Analyst : Right. Understood. And Rajeev, sir, the housing wire and winding wire business that we classify, is that all through retail channel or there is some bit of a direct channel in housing wire and winding wire business?

Question: Shrinidhi Karlekar - HSBC - Analyst : But it will be a small number, as you said?