KEI Industries' Sanand expansion and export order book support growth

Investment View and Valuation

In its October 22, 2026 results update, Motilal Oswal Financial Services said KEI Industries delivered 2QFY27 earnings broadly in line with its estimates. The broker retained its Buy rating despite reducing FY27E and FY28E EBITDA estimates by around 4 per cent and 6 per cent, respectively, after trimming cables and wires revenue and margin assumptions.

Motilal Oswal sees capacity expansion, a healthy order book, export demand and an improving product mix as key growth drivers. It identifies competitive intensity and the timely execution and ramp-up of new capacity as important monitorables.

The broker values KEI Industries at 40 times FY28E EPS and has set a revised target price of Rs 5,180, reduced from Rs 5,670.

2QFY27 Financial Performance

KEI Industries reported 2QFY27 revenue of Rs 3,776 crore, up around 39 per cent YoY and around 10 per cent above Motilal Oswal's estimate. EBITDA rose around 40 per cent YoY to Rs 377 crore and was broadly in line with estimates, as lower-than-expected cables and wires margin offset the revenue beat.

Higher depreciation and interest costs, up around 51 per cent and 22 per cent YoY, respectively, and lower other income also affected profitability.

Segment Performance

Cables and Wires

The cables and wires segment recorded revenue growth of around 40 per cent YoY to Rs 3,669 crore in 2QFY27. Segment EBIT increased around 44 per cent YoY to Rs 413 crore, while EBIT margin expanded 30 basis points YoY to 11.3 per cent. However, the margin remained below the broker's 12.0 per cent expectation.

Stainless Steel Wires and EPC

Stainless steel wire revenue grew around 16 per cent YoY to Rs 63 crore, with EBIT margin improving 30 basis points YoY to 8.5 per cent. EPC revenue was Rs 104 crore, and the segment reported an EBIT loss of Rs 9 crore versus an EBIT profit of Rs 5 crore a year earlier.

Management is winding down the EPC business, which contributes only around 1 to 1.5 per cent of revenue. It expects residual losses of Rs 5 crore to Rs 7 crore per quarter for the next one or two quarters.

1HFY27 Performance and Capital Allocation

For 1HFY27, KEI Industries reported revenue, EBITDA and adjusted PAT growth of 31 per cent, 46 per cent and 36 per cent YoY to Rs 6,960 crore, Rs 770 crore and Rs 540 crore, respectively. Operating margin improved 1.2 percentage points YoY to 11.1 per cent.

However, operating cash flow was an outflow of Rs 490 crore because of higher working capital, compared with an inflow of Rs 380 crore in 1HFY26. Capex was Rs 420 crore, including Rs 330 crore for Sanand.

Management Guidance and Capacity Expansion

Management guided for revenue growth of around 25 per cent in FY27 and around 20 per cent CAGR over the medium term. It reiterated annualised operating margin guidance of around 11 per cent in FY27, with expansion to 11.5 to 12.0 per cent in FY28 as Sanand utilisation improves.

Management aims to increase Sanand's monthly revenue run rate to Rs 150 crore to Rs 200 crore in 3QFY27, followed by Rs 250 crore to Rs 300 crore per month in the following quarter.

Order Book, Exports and Sanand Phase II

The pending cables and wires order book was Rs 4,930 crore, including export orders of Rs 990 crore, with a three-to-four-month execution cycle. The US represented around 50 per cent of export orders, alongside demand from the Middle East and Australia.

Sanand Phase II, comprising EHV and HT capacity, is expected to be commissioned by March 2027 and could add Rs 1,500 crore to Rs 1,700 crore of revenue at peak utilisation. Management expects EHV sales to ramp up from 2QFY28.

Management expects inventory days to decline as the Sanand facility ramps up, while noting that the current inventory build-up reflects initial stocking requirements.

Motilal Oswal Estimates

Motilal Oswal forecasts KEI Industries revenue CAGR of around 19 per cent over FY26 to FY28, including around 21 per cent growth in cables and wires and around 7 per cent growth in stainless steel wires. EPC revenue is expected to decline around 7 per cent annually.