KEI Q2 FY27 Earnings Call: Raises Revenue Growth Guidance To 25%+, Sanand Phase 2 By March 2027

KEI held its Q2 FY27 earnings call on October 21, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Top-Line, Modest Margin Progress

• Q2 FY 2026-2027 net sales of Rs.3,776 crore, +38.52% YoY — total wire & cable sales grew 39.5% YoY; H1 FY 2026-2027 net sales reached Rs.6,961 crore (+31% YoY).
• Q2 EBITDA of Rs.401 crore vs Rs.311 crore (+28.69%) — EBITDA margin 10.62%; operating margin 9.97% vs 9.88% in Q2 FY 2025-2026.
• Q2 PAT of Rs.262.45 crore, +28.96% YoY — PAT margin 6.95% vs 7.46% in Q2 FY 2025-2026, indicating slight margin compression at the net level.
• H1 FY 2026-2027 EBITDA margin of 11.73% vs 11.46% — EBITDA grew 34% and PAT Rs.536.59 crore (+34.4%); H1 operating margin 11.09%.
• Segment split (Q2 FY 2026-2027) — domestic wire & cable Rs.3,184 crore (+46%), exports Rs.493 crore (vs Rs.472 crore), EHV Rs.217 crore (vs Rs.172 crore), EPC Rs.46 crore (vs Rs.47 crore), stainless steel wire Rs.61 crore (vs Rs.53 crore).
• Revenue mix: 59% B2C via distribution, 26% B2B/institutional, 13% exports — balance 2% from domestic EPC and stainless steel wire.
• Q2 FX gain of Rs.8 crore — Q1 FY 2026-2027 exchange gain was under Rs.1 crore; other income contributes only ~0.3-0.4% to EBITDA and varies quarter to quarter.

Deep Order Book, US-Weighted Export Pipeline

• Order book of Rs.4,927 crore (wire & cable) plus Rs.258 crore (EPC) — of which ~Rs.991 crore is export orders, to be executed within 3-4 months of the Q2 FY 2026-2027 call.
• US accounts for almost 50% of the Rs.991 crore export order book — balance spread across the Middle East and Australia; CFO noted US demand is currently very strong from both the industry and energy segments.
• H1 FY 2026-2027 exports nearly flat — Rs.834 crore vs Rs.846 crore in H1 FY 2025-2026; Q2 exports of Rs.493 crore vs Rs.472 crore described by the CFO as "almost flat," with the analyst attributing softness to war-related disruption.
• Export salience target of 17-18% for FY 2026-2027 (cited by the analyst) remains in focus; management cited a very good overseas order book and is hopeful exports grow substantially from Q3 FY 2026-2027.
• No absolute FY 2026-2027 export revenue guidance given — CFO indicated that if exports rise significantly, domestic institutional revenue may see a slight decrease, with overall growth expected to remain the same.
• Full-year FY 2026-2027 export growth guidance of 25% (management guidance as recapped by the analyst) against flat H1 actuals, implying a steep H2 acceleration is required.

Sanand Phase 2 Commissioning Anchors the Margin Path

• Sanand Phase 2 (EHV and HT cable) commercial production by end of March 2027 — requires ~3 months to settle down plus approvals, with EHV sales from Sanand rising quarter-after-quarter from Q2 FY 2027-2028.
• Sanand adds Rs.1,500-1,700 crore of EHV capacity in value terms — over and above existing Rs.700 crore EHV capacity, though reaching peak will take time; peak revenue expected in FY 2028-29 per the ramp-up guidance reaffirmed from the FY 2025-2026 call.
• Cumulative Sanand capex of Rs.1,876 crore till 30 September 2026 — H1 FY 2026-2027 capex payments of Rs.402 crore (Sanand Rs.333 crore), with a further ~Rs.200 crore planned in H2 FY 2026-2027.
• CWIP of ~Rs.1,300 crore as of September 2026 — driven primarily by Sanand; almost all CWIP will move to capitalized after Phase 2 commences by March 2027.
• Capex of ~Rs.600 crore per year for the next 3 years (FY 2026-2027 through FY 2028-2029) — inclusive of Rs.100-150 crore annual maintenance capex; the Salarpur plant will take another 2 years (from FY 2026-2027) to complete.
• H1 FY 2026-2027 utilization: cable 77%, house wire 64%, stainless steel 91%, communication cable 43% — Sanand utilization expected to increase month after month in H2 FY 2026-2027; sufficient house wire capacity for the next 2 to 3 years (FY 2027-2028 onwards).
• Peak Sanand asset turns guided at more than 3x but less than 4x — as of now, per management.

11-12% EBITDA Path Reiterated Amid Analyst Scrutiny

• CFO Rajiv Gupta stated there is "no guidance cut" — EBITDA margin guidance remains 11-12%, applicable across FY 2026-2027 and FY 2027-2028 ("guidance of EBITDA margin 11 to 12 will be completing in 27 and 28, two financial years").
• FY 2026-2027 EBITDA margin guided at ~11%, up from ~10.5% earlier — on economies of scale and a higher retail/export mix; another ~0.5% improvement expected in FY 2027-2028 once Sanand is fully commissioned.
• Glide path reiterated: 11% → 11.5% → 12% — the step-up to 11-11.5% is linked to Sanand completing by March 2027; once utilization reaches 60-70%, the CFO said EBITDA margin will "definitely cross" 11% (period unspecified).
• PhillipCapital's Natasha Jain flagged ~100 bps of unexplained YoY gross margin decline in Q2 — EPC losses explain ~80 bps; she recalled Q1 FY 2026-2027 call guidance of a further 50 bps improvement, a gap management did not directly reconcile.
• Management urged full-year (annualized) evaluation — Q1 FY 2026-2027 EBITDA was distorted by inventory valuation gains flowing into subsequent quarters; H1 operating margin of 11% sits at the top of the 5-year historical H1 range of 10.27%-11%.
• Historical margin context — operating margin was 10-10.5% until FY 2024-25 and close to 10.5% in FY 2025-26; raw material price changes are fully passed through with no margin impact.
• Interest income tailwind rolling off — FD income was elevated in the two years after the QIP raise; management expects interest income to be very low in FY 2026-2027.

Inventory Build Tied to Sanand; EPC Losses Continue

• Inventory rose ~Rs.1,200 crore in H1 FY 2026-2027 — ~Rs.600-700 crore attributed to stocking the new Sanand plant, the balance from copper price valuation of existing factory inventory; significantly impacted operating cash flows.
• Inventory expected to normalize to 90 days of COGS by March 2027 — per CFO Rajiv Gupta, with holding levels the same by March 2027 and inventory days declining from H2 FY 2026-2027 onward into FY28.
• Working capital days increased in H1 FY 2026-2027 — characterized in the discussion as an industry-wide phenomenon, not company-specific; debtor days have already come down, and creditors were not increased as available cash was used instead, saving interest cost.
• EPC (being closed, ~1-1.5% of revenue) posted EBIT losses of Rs.8 crore in Q2 FY 2026-2027 — vs Rs.5 crore in Q1 FY 2026-2027; CFO guided to Rs.5-7 crore losses in each of Q3-Q4 FY 2026-2027, with the analyst framing full-year FY 2026-2027 EPC EBIT loss at ~Rs.20 crore and no EPC contribution from FY 2027-2028.
• Price pass-through via natural hedge — a 3-4 month institutional order book alongside 3-3.5 months of inventory passes prices through month after month; retail prices are revised twice a month depending on metal movement.
• Copper dynamics — management stated falling copper prices increase volumes while rising prices reduce volumes but raise sale value; during FY 2016-17 to FY 2018-19 copper trended down yet the industry grew at a 16-17% CAGR.

Guidance Raised; Long-Horizon Targets Restated

• FY 2026-2027 revenue growth guidance raised to 25%+ (from 20% earlier) — H1 FY 2026-2027 revenue already grew ~30% YoY; analyst Aditya Bhartia (Investec) noted 25% full-year guidance implies significantly slower H2 momentum vs H1; CFO said any upside over guidance will be reflected in results.
• 20% revenue CAGR reaffirmed into FY28 and over the next 3 to 4 years (FY 2027-2028 onwards) — MD Anil Gupta added this holds even if copper prices remain stable; for FY 2027-2028 the CFO guided to 18-20% volume growth if copper stays flat, higher if copper declines.
• Management aims for 20%+ top-line growth over the next 4-5 years (through ~FY 2031-2032) — CFO guided PAT should grow at least 24-25% over the same horizon, with the operating profit pool growing at least 3-4% above top-line; he declined to confirm a specific operating profit growth rate, stating he had not calculated it.
• ROE of 19-20% and ROCE of ~23-24% guided from FY 2027-2028 onward — returning to historical levels as Sanand's completion reverses the recent ROCE decline flagged by the analyst.
• Track record cited: 16-17% revenue CAGR vs ~24% profit CAGR over the past 15 years — and growth of more than 18-19% over the last 3 years despite new entrants.
• Government investing Rs.11-12 lakh crore of capex in FY 2026-2027 — management cautioned these budgets are framed in value terms, not volume terms, and argued demand will persist as long as GDP grows above 7% (period unspecified).
• Retail reach may potentially double over the next 5-10 years (roughly FY 2031-32 to FY 2036-37) — management cited "huge potential in the country"; current reach spans more than 25,000 retailers and over 2 lakh electricians, with 2,146 active dealers (vs ~2,340 in Q2 FY 2025-2026, described as normal churn around ~2,100).