R R Kabel reported a 52% year-on-year revenue increase for the second quarter of fiscal 2027, supported by strong wire sales. While the company's electrical goods segment grew by 42%, it continues to operate at a loss. Investors are tracking how the company manages its new manufacturing expansion in Rajasthan and improves profitability in its newer business segments.
R R Kabel reported a strong second quarter for fiscal year 2027, with revenue rising by 52% compared to the same period last year. This growth was largely supported by steady demand in the company's core wires and cables business, where wire sales saw double-digit growth. The company also improved its operational efficiency, with its working capital cycle—the time taken to convert cash invested in operations back into cash—tightening to 46 days as of September 2026.
Expanding Production Capacity
The company has made money spent on expansion a key priority. For the current fiscal year, R R Kabel has allocated 6 billion rupees for capital projects. Additionally, the company has approved another 2 billion rupees for land acquisition in Rajasthan. This investment is intended to boost manufacturing capacity, helping the company meet anticipated long-term demand. For investors, the success of this expansion will depend on the company's ability to complete construction on time and start production without significant cost increases.
Balancing Growth and Profitability
Beyond wires and cables, R R Kabel is growing its Fast Moving Electrical Goods (FMEG) segment, which includes products like fans and appliances. This segment reported a 42% jump in revenue, aided by new product launches. However, the segment is currently operating at a loss, with an operating margin of -4.5%. The management expects to reach a break-even point in this segment within the current fiscal year through better cost control and higher sales volume.
Investors are keeping a close watch on this transition. The wires and cables industry in India is highly competitive, with established players like Polycab and Finolex, and is also heavily dependent on the real estate and construction cycle. Profitability in this sector is often sensitive to the prices of key raw materials like copper and PVC. While the company has projected an operating margin of 9.5% for its wire and cable business for the full fiscal year, reaching that target will require careful management of input costs.
Moving forward, the primary monitorables for shareholders include the commissioning timeline of the new Rajasthan facility, the speed at which the FMEG segment reaches profitability, and the company’s ability to maintain margins in a volatile commodity market.