KEI Industries reported a 39% jump in revenue to ₹37.8 billion for the second quarter of fiscal year 2027. Although the company saw strong sales growth, profit margins stood at 10%, which was slightly below expectations. Investors are now watching the upcoming Sanand Phase II facility, which is scheduled to start operations by March 2027 and aims to increase the company's production capacity for high-voltage cables.
KEI Industries delivered strong revenue growth in the second quarter of fiscal year 2027, with earnings rising 39% compared to the same period last year. The company reported revenue of ₹37.8 billion, a figure that came in ahead of analyst expectations. The net profit also showed positive momentum, climbing 32% to reach ₹2.7 billion. Despite the strong top-line numbers, the operating profit margin was 10%, trailing initial market expectations by 1.3 percentage points. This indicates that costs in the cables and wires segment have been higher than anticipated, which can sometimes impact profitability for manufacturers in this space.
Strategic Expansion at Sanand
A major focus for the company is the upcoming expansion at its Sanand Phase II facility. This site is dedicated to producing extra-high voltage and high-tension products, which are key for power transmission projects. The management expects this facility to be operational by the end of March 2027. Once fully functional, the new plant is projected to contribute significantly to the company's revenue, with potential additions estimated between ₹15 billion and ₹17 billion. Current inventory levels have increased, partly due to the company stocking up in preparation for this new capacity.
Order Book and Market Context
The company’s cables and wires division is supported by a pending order book of ₹49.3 billion. Exports play a vital role in this pipeline, contributing ₹9.9 billion to the total orders, with a significant portion tied to demand from the United States. These export orders typically have a shorter turnaround time of three to four months, which helps the company maintain a steady flow of business. KEI Industries continues to see strong demand from infrastructure and real estate sectors, which are primary consumers of electrical cables. However, the industry is also sensitive to fluctuations in the prices of raw materials like copper and aluminum, which can affect profit margins.
Following the quarterly results, brokerages have updated their outlooks. Motilal Oswal recently maintained a 'Buy' rating on the stock but revised its price target to ₹5,180 from ₹5,670. The brokerage firm noted that while revenue growth remains robust, there is a need to watch how efficiently the company manages its profit margins as it scales up operations.
For investors, the key area to monitor in the coming quarters will be the successful commissioning of the Sanand Phase II facility and whether the company can achieve its target of improving operating profit margins to the 11.5% to 12% range in the next fiscal year. Any delays in the expansion timeline or further pressure on raw material costs could influence the company's financial performance.