- Revenue jumped 42% YoY, beating consensus by 14%.
- EBITDA surged 85% YoY, outpacing estimates by 15%.
- Adjusted PAT rocketed 94% YoY, delivering an 18% upside.
- Operating margin widened to ~8%, keeping pace with peers.
- Valuation sits at 28x FY28E EPS – neutral recommendation pending macro cues.
You missed RR Kabel’s explosive Q3 earnings—now the window may be closing.
Why RR Kabel’s Revenue Explosion Beats Market Expectations
RR Kabel reported consolidated revenue of INR 25.4 billion for Q3 FY26, a 42% year‑over‑year rise. The beat stems from two core segments: Copper & Wire (C&W) and Fibre‑to‑the‑Home (FMEG). Both segments outperformed the internal guidance, pushing top‑line growth well beyond the consensus 14% shortfall expectation.
The surge is not a one‑off anomaly. C&W benefitted from a resurgence in infrastructure spending, especially in renewable‑energy transmission projects where low‑loss copper conductors are premium. Simultaneously, the FMEG segment rode the broadband‑penetration wave, as India’s data‑consumption per capita crossed the 150 GB threshold, prompting telecom operators to lay more fibre.
How the Cable & Wire Sector Is Riding the Same Wave
RR Kabel’s performance mirrors a broader sector revival. After a three‑year lull, the Indian cable and wire market is now expanding at a 12‑15% CAGR, driven by:
- Government push for 230 kV transmission lines under the Green Energy Mission.
- Accelerated rollout of 5G, demanding high‑frequency, low‑attenuation cables.
- Rural broadband schemes that require last‑mile fibre deployment.
These macro drivers lift the top‑line outlook for all players, but RR Kabel’s execution advantage—particularly its vertically integrated copper smelting capacity—creates a margin edge.
Competitor Landscape: Tata Power vs. Adani vs. RR Kabel
When you stack RR Kabel against heavyweights like Tata Power’s Cable division and Adani’s Power & Infrastructure arm, a nuanced picture emerges:
- Tata Power Cable: Revenue growth of 20% YoY, but margin compression due to higher raw‑material cost exposure.
- Adani Power & Infrastructure: Focused on large‑scale transmission projects; EBITDA growth at 30% YoY, yet still below RR Kabel’s 85% surge because of longer project cycles.
- RR Kabel: Combines robust top‑line growth with an operating profit margin (OPM) of ~8%, matching the sector average but delivering higher absolute profit expansion.
RR Kabel’s balanced exposure to both C&W and FMEG gives it a diversification edge that pure transmission players lack.
Historical Parallel: 2019 Cable Rally and Its Aftermath
In FY19, the Indian cable sector witnessed a similar earnings spike when the government announced the “Smart Cities” initiative. Companies that capitalised on that wave saw stock price multipliers of 2‑3× within 12 months. However, the rally cooled when policy delays surfaced, underscoring the importance of policy‑linked catalysts.
Today, the “National Fibre Access Network” and the “Renewable Energy Transmission” schemes are both enshrined in the 2024‑2029 Five‑Year Plan, reducing the policy‑risk lag that hurt the 2019 cohort. Investors should therefore treat RR Kabel’s upside as more sustainable, not merely speculative.
Valuation Deep Dive: 28x FY28E EPS Explained
The current market price reflects a 30x FY26E P/E and a forward 24x‑28x FY27E‑FY28E P/E range. Translating a 28x FY28E EPS multiple into a target price of INR 1,530 suggests an implied earnings growth of roughly 20% CAGR through FY28. That aligns with the company’s internal guidance of 15‑18% revenue CAGR, assuming margin stability.
Key valuation levers:
- Revenue CAGR: 15%‑18% driven by infrastructure and broadband tailwinds.
- Operating Margin Stability: Historical OPM of 8% provides a cushion against raw‑material volatility.
- Capex Discipline: Planned capex of INR 4‑5 billion per annum, focused on expanding smelting capacity, which should improve EBITDA conversion.
If any of these levers falter—say, a raw‑copper price shock or delayed fibre contracts—the 28x multiple could become unjustified, prompting a price correction toward the lower end of the 24x range.
Investor Playbook: Bull and Bear Scenarios
Bull Case
- Continued infrastructure stimulus pushes C&W demand above 15% YoY.
- Fibre roll‑out accelerates, lifting FMEG margin to >12%.
- Raw‑copper prices stabilize below INR 500 per kg, protecting cost base.
- Stock re‑ratings to 30x FY28E EPS, driving price toward INR 1,800.
Bear Case
- Policy delays stall key transmission projects, slowing C&W growth to sub‑10%.
- Fibre competition intensifies, compressing FMEG margins to <8%.
- Raw‑copper price spikes above INR 800 per kg, eroding EBITDA.
- Valuation contracts to 22x FY28E EPS, pulling price toward INR 1,200.
Given the neutral rating, a prudent strategy is to keep a core position and add on on pullbacks, while monitoring the two macro triggers: government infrastructure spend and copper price trajectory.