R R Kabel: Revenue Jumps 52%, but FMEG Losses

R R Kabel makes wires, cables and FMEG products. It is India’s largest exporter of wires and cables, shipping to over 66 countries. Its network spans 7,200 dealers and 215,000 retail outlets. What happened: In Q2FY27, consolidated revenue grew 52% year on year to Rs 3,284 crore, driven by a 53% rise in wires and cables and a 42% rise in FMEG. Wires and cables volume grew in the high single digits. Profit Before Tax in wires and cables rose 57% to Rs 282 crore, with a PBT margin of 9.4%, up from 9.2% in Q2FY26. FMEG reported a segment loss of Rs 12.5 crore. Why it matters: R R Kabel recently added medium-voltage power cables up to 66 kV and acquired UM Cables, a Usha Martin subsidiary, for Rs 77 crore. The acquisition adds optical fibre and communication cable capability for hyperscale data centre build-outs and 5G fiberization. Under Project RRise, management targets a long-term EBIT margin of 10.5% in wires and cables. Exports are expected to stay at 32-35% of revenue in H2FY27. What I am watching: Management has guided FY27 EBIT margins at 9.5% and wire and cable volume growth of 14-15%. FMEG losses narrowed to -2.2% margin in H1FY27 from -4.5%, with break-even targeted for the full year. The UM Cables plant needs a business plan before ramping, with revenue expected from FY28. The stock trades at 34.5 times earnings, below its three-year median of 51.3 times. My stance: The revenue growth is real and the 66 kV and optical fibre moves are strategic. But FMEG is still loss-making and the UM Cables acquisition will take time to contribute. At 34.5 times earnings, the stock has de-rated from its peak and the margin improvement story needs to deliver. I do not hold a position in R R Kabel at the time of writing. This is not investment advice.