KEI Industries FY26 Sales Jump 20.7%, Volume Limited by Peak Capacity; Sanand Plant to Drive Future Growth

KEI Industries reported strong full-year results for FY25-26, with net sales reaching INR 11,746 crore, a significant 20.66% increase year-on-year. The company's export sales showed robust momentum, growing 45% to INR 1,833 crore.

Sales Surge, Volume Constraint

This impressive revenue growth was achieved even as volume expansion was restricted to 6.21%. Existing manufacturing plants in Rajasthan operated at peak capacity utilization, creating a bottleneck for higher volume output.

Export sales were a key driver, contributing significantly to the company's performance. The business-to-consumer (B2C) segment, supported by an extensive distribution network, accounted for 54% of overall sales. Meanwhile, metal prices saw notable increases over the year, with copper rising 16.85% and aluminum 9.91%, impacting raw material costs.

Sanand Plant to Unlock Future Expansion

The company is now looking to its new Sanand facility in Gujarat to alleviate capacity constraints and drive future volume growth. The first phase of this plant is operational, although its commissioning was delayed by six months. Phase 2 is scheduled for completion in the fourth quarter of FY27. KEI Industries is targeting a significant volume growth of 17-18% in FY27, which is critically dependent on the successful ramp-up of the Sanand plant.

Strategic Investments Fuel Growth

To fund such expansion, KEI Industries had previously raised approximately INR 1,311 crore through a Qualified Institutions Placement (QIP) in late 2023. These funds are earmarked for capital expenditure, primarily for the development and expansion of manufacturing facilities like the new Sanand plant, and for backward integration initiatives. Planned annual capital expenditure is set between INR 600-700 crore for the next 2-3 years.

Outlook and Risks

The company aims to increase its export share to 20% of total sales and sees potential for restarting exports to the US market following tariff changes. However, risks remain. Logistics issues in regions like the Middle East have already impacted exports, causing an estimated loss of INR 50 to 60 crore in March. There is also a medium-term dependency on imported medium and extra-high voltage compounds, with domestic manufacturing planned within two years. Successful and timely stabilization of the Sanand plant's operations is crucial for future volume growth.

Market Comparison and Key Metrics

KEI Industries' FY26 revenue growth of 20.66% outpaced industry peers such as Polycab India and RR Kabel, who also reported strong results but may have different operational flexibilities or product range advantages. KEI's immediate challenge lies in overcoming its capacity constraints. The company aims to reduce receivable days from 1.88 to 1.75 months in the upcoming fiscal year. Operating margin guidance for the current year is projected between 10.5% and 11%. Investors will closely track the successful ramp-up of the Sanand plant, progress on export markets, and developments in backward integration plans.