Margin beat, revenue growth quietly cut — execution risk on Sanand ramp

OPM 12.43% vs 11.49% prior year (+94 bps). Confirmed by data; drivers: EHV +47%, D2C retail 51%→59%, fixed cost leverage

EBITDA ₹415 Cr vs ₹297 Cr (39.5% growth confirmed). But Q1 is sequential down 8.4% revenue; leverage is Q1-specific, not sustainable

Export ₹341 Cr vs ₹375 Cr (-9% YoY). Management cites Middle East war, Iran crisis, US tariffs. Expects 50%+ H2 growth to hit 17-18% full-year target

Formally guiding >20% (cautious). Q1 at +23% YoY. Anil Gupta says 'more than 25%' off-call. Real target appears 25%+, not formally raised from prior 25-30% range

Media initially claimed ₹3,000 Cr; Anil corrected: 'a slip of tongue... ₹1,500-2,000 Cr'. Sanand at 50% utilization Q1 supports this phased ramp estimate. Effective CUT from media claim

Prior FY26 call guided 17-18% volume growth, 25-30% revenue growth. Current guidance >20% revenue (hedged). Volume growth not reiterated; evasive on market share vs capex constraint

Prior call (FY26): 25-30% revenue growth potential. Q1 call: >20% (formal), 'likely >25%' (Anil, informal). Sanand ramp delays + export headwinds forcing de facto cut from 25-30% to 20-25% range.

Media claim: ₹3,000 Cr. Corrected on call: ₹1,500-2,000 Cr (Anil: 'slip of tongue'). Implies 50% utilization lingers through Q3, full ramp into FY28. Effective -33% cut from media.

Prior: 10.5-11% EBITDA. Current: 11-12% operating margin. Crossed 11% hurdle; new trajectory +50-100 bps higher. Margin floor raised despite Sanand dilution.

Announced ₹700 Cr capex for Salarpur (LV/MV cables, not EHV). 2-year execution. Increases total capex pipeline (₹600-700 Cr/year baseline + Salarpur) but phased across FY28-29.

Q1 at 10.7% of sales (₹341 Cr export down 9%). Requires 50%+ H2 growth to achieve. Realistic if Middle East, US clear; otherwise at risk.

Retail D2C contribution up 51% to 59%, plus some high-margin export orders. Product mix and expenditure-to-sales ratio improved. Incremental sales don't proportionally increase fixed costs.

No share loss. Demand is very strong. Capital is the constraint — allocating both to growth and capex. Target 20%+ CAGR disciplined; we are not comparing peers but growing ourselves.

No, that was a slip of tongue. We expect ₹1,500-2,000 Cr from Sanand in FY27. Full ₹6,000 Cr capacity will take longer due to ramp-up challenges (manpower, machinery stabilization).

EHV market >₹3,000 Cr total. Universal Cable and imports also compete. Our EHV operating margin ~15% vs LV/MV 10.5-11% institutional, 11% retail.

Greenfield ramp-up takes time — manpower, machinery stabilization. Month-on-month production rising. Capital allocation discipline is key; we won't over-commit.

Yes, sustainable due to mix (less EPC, more high-margin cable) and retail expansion. Quarterly volatility ±25-50 bps on commodity rates; full-year averages out.

New projects take 2.5-3 years construction, 1 year ramp. We don't target 35-40% growth; 20%+ CAGR is disciplined. Market tight for 2 years.

Competitors use those numbers now; we decided not to disclose individual product metrics.

Middle East crisis, shipment delays, US tariffs clearing now. Markets positive; we'll achieve it. Similar recovery happened last year.

Currently 23-24% due to capex cycle. Post-Sanand full ramp (FY28-29) should improve. FY29-30 target ₹25,000 Cr revenue; ₹20k Cr likely in '28-'29.

Q1 +23% YoY. Sanand ₹1.5-2k Cr FY27, export recovery (+50% H2) required. Domestic +29% YoY momentum; capex discipline prioritized over aggressive volume.

Q1 delivered 12.43%. Mix drivers (EHV, D2C retail) sustainable. Sanand dilution expected but manageable at 50% utilization.

Sanand: ₹300 Cr more in FY27 (₹1,722 Cr done). Sanand total ₹2k Cr → ₹6-7k Cr revenue (asset turns 3-4x). Salarpur FY28-29 ramp-up.

Sanand Phase 1 utilization only 50% in Q1 despite full commissioning. EHV cable tower (152m) still under construction; commissioning target Mar 2027. FY27 revenue contribution ₹1.5-2k Cr vs initially media-claimed ₹3k Cr. Greenfield ramp-up complexity (manpower, machinery, environmental factors) extending timeline.

Q1 export ₹341 Cr down 9% YoY due to Middle East war (Iran crisis, shipment blocks) and US custom duty issues. FY27 target 17-18% of sales from exports requires 50%+ H2 growth. Geopolitical risks (Trump policies, regional conflicts) persistent and unpredictable.

Industry grew 33-35% value on 28% pricing inflation; KEI at 25% value growth. Implies either market share loss or deliberate capital discipline. Analysts questioned this gap; management claims demand strong but capital is constraint. If true, KEI risks ceding market share to more aggressive peers.

Q1 gross margin at 4-5 year high on mix shift (EHV +47%, retail D2C +800 bps, reduced EPC). Sustainability at risk if commodity prices rise, pricing power fades, or mix reverts to lower-margin products.

ROCE currently 23-24% (diluted by Sanand capex cycle). ₹600-700 Cr annual capex for 3-4 years extends dilution. New Salarpur ₹700 Cr project (FY28-29 ramp) delays 30%+ ROCE recovery to FY28-29 or later.