Ladies and gentlemen, good day and welcome to KEI Industries Limited, Q4 and FY2025 earnings conference call, hosted by Nuvama Institutional Equities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star, then Zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Achal Lohade from Nuvama Institutional Equities. Thank you, and over to you, sir.
Yes, thank you, Manav. Good afternoon, everyone. On behalf of Nuvama Institutional Equities, we are glad to host the senior management of KEI Industries. We have with us Mr. Anil Gupta, Chairman and Managing Director of the company, Mr. Rajeev Gupta, Executive Director of Finance and CFO. We'll start the call with opening remarks from the management and then move to Q&A. Thank you, and over to you, Anil and Rajeev.
Yeah. Green light, green light, green light.
Good afternoon, dear colleagues. Thank you very much for joining. I'm Anil Gupta, Chairman and Managing Director of KEI Industries. Along with me, Mr. Rajeev Gupta is also there, Executive Director and CFO. I'll give you a brief about the Q4 summary of the company's results and briefly about the annual results. You must have gone through the results by now. The net sales in Q4 achieved is INR 2,914.8 crore. We have achieved a growth in net sales by 25.1%. EBITDA is in line, grown by 30.3% during this period in the Q4. EBITDA/net sales margin is 11.61%, as against 11.15% in the same period previous year. Profit after tax in this quarter is INR 226 crore, against INR 168.8 crore. The growth in the PAT is 34.2%. Profit after tax/net sales margin is 7.77%. Domestic institutional cable sales, can we shift to annual results?
Domestic institutional cable sale, wire and cable, is INR 760 crore, against INR 676 crore last year. Domestic export sale in this quarter is INR 492 crore. Cable and wire, INR 429 crore. Extra high voltage INR 24 crore, EPC INR 16 crore, stainless steel wire INR 23 crore. This is against INR 257 crore in the previous year's same period. The growth in the export is around 92%. I would like to mention that we have focused on export and earmarked a substantial capacity on exporting. Hence, the growth in the domestic sale is around 18%. Is it?
Overall.
Overall, we have grown by 25%. Total cable institutional sale, that is B2B, is 46%, as against 44% in the previous year's same period. Sales through distribution network, that is B2C, was INR 1,498 crore in the fourth quarter, against the same period, INR 1,056 crore. Growth in the B2C sale is 42%. B2C sale through distribution network contributed 51% in the fourth quarter, as against 45% in the previous year's same period. Overall, wire and cable segment has grown in this quarter approximately 35% over the previous year's same quarter, and the profitability has also improved in the wire and cable segment during this quarter. EPC sale, other than cable, is INR 72 crore, as against the previous year's same period, INR 192 crore.
Due to a decline in EPC sale by 63% and EHV cable sale declined by 48% during the quarter, the company's operating margin also got affected by approximately 0.5%, which will improve in the current financial year because of the healthy order book of extra high voltage cables as of today. Out of total sales of EPC, EHV EPC sale is INR 320 million, as against INR 500 million in the same quarter previous year. Now, I'll give a brief summary of annual results of financial year 2024-2025. Net sales in the financial year 2024-2025 is INR 9,736 crore, against INR 8,120 crore. Growth in the net sales is 19.9%. EBITDA is INR 1,062 crore, and the growth in EBITDA is 19.9%. EBITDA/net sales margin is 10.92% for the full year, same as the previous year. Profit after tax in FY2024-2025 is INR 696 crore. The growth in the PAT is 19.85%.
Profit over net sales margin is 7.15%, similar to last year. The export sale in FY 2024-2025 total is INR 1,267 crore. In this, wire and cable is INR 983 crore, extra high voltage cable INR 72 crore, EPC INR 105 crore, stainless steel wire INR 104 crore, and trading sale INR 3 crore. Against the previous year's same period, it was INR 1,097 crore. Growth in export sale on full year is 15%, but growth in the cable export is 40% because of the decline in EPC sale. We are executing a contract for Gambia for EPC turnkey project. Last year, there was a substantial sale in that project. Hence, the EPC sale was high. The growth in the cable export is 40% in the whole year. The total active working dealers of the company as of 31st March 2025 are approximately 2,082.
Sales through distribution network for full year is around 52%, against 46% in the previous year. The EPC sale, other than cable, is INR 343 crore, against INR 562 crore in the previous year. Out of the total sales of EPC, EHV extra high voltage EPC sale is INR 137 crore, against INR 155 crore in the previous year. The sale of stainless steel wire in 2024-2025 is INR 212 crore, against previous year INR 218 crore. Volume increase in the cable division, based on the production and for the consumption of metal in FY 2024-2025, as compared to previous year's same period, is approximately 20%. In Q4, volume increase is 21%. Total pending orders, including EPC, as of 30th April 2025, is approximately INR 3,839 crore. Out of which, EPC orders are INR 423 crore, extra high voltage cable pending orders are INR 603 crore, domestic cable orders INR 2,112 crore, cable export orders INR 701 crore.
The total cable and wire segment is INR 3,416 crore, and the total order book, including EPC, is INR 3,839 crore. CARE Ratings has upgraded the company's long-term ratings as AA Plus. Long-term ratings from India Ratings and Research Private Limited and ICRA is AA. Short-term ratings from India Ratings, ICRA, and CARE Ratings is A1 Plus. The book value per equity share of the company is INR 605 as of 31st March 2025, as against INR 348 as of March 31st, 2024, increased due to QIP issues. The company has booked an expenditure of INR 12.91 crore in FY 2024-2025 towards CSR activities. Total borrowing is INR 178 crore, channel finance, out of which channel finance is INR 127 crore. Acceptance creditor as of 31st March 2025 is INR 246 crore, as against INR 506 crore as of 31st March 2024. Net cash available is INR 1,491 crore. This includes INR 1,385 crore of QIP as of 31st March 2025. QIP fund status.
The company has raised INR 2,000 crore through QIP on 28 November 2024 to fund our new project at Conant, repayment of outstanding debt, and for general corporate purposes. INR 1,450 crore for CAPEX, INR 240 crore for general corporate purposes, INR 276 crore for repayment of term loan and WCDL, and INR 34 crore QIP expenses. The company has utilized QIP fund of INR 621 crore up to 31st March 2025. Now, the future outlook. During 2024-2025, the company has incurred a total capital expenditure payment of INR 618 crore, out of which Conant INR 384 crore, Chinchpada in Silvassa INR 68 crore, Diwadi INR 32 crore, Pathredi expansion INR 58 crore, and Salar to Gland INR 23 crore. Other plants and locations INR 53 crore. Brownfield CAPEX at Chinchpada and Pathredi has added further capacity for wire and power cables, and these expansions have been completed in FY 2024-2025.
After the completion of these brownfield CAPEX, capacity utilized during 2024-2025 is approximately 85% in cable division, 71% in housewire division, 89% in stainless steel wire division, and 38% in communication cables. During the current financial year 2025-2026, unutilized QIP fund of INR 1,300 crore will be invested to complete the Conant project. Commercial production of first phase of low tension and HT cables will commence by end of Q1 FY2025-2026, and the total project will be completed by end of FY2025-2026. The company is hopeful to achieve 17%-18% growth and improve our operating margin during FY2025-2026, considering phase one commercial production in Conant and strong order book position of domestic institutional for cable sale, export orders for cable sales, and extra high voltage cables, and the total order book of cables at INR 3,416 crore.
After completing the Conant project and with the continued strong demand in domestic and overseas markets, we are hopeful to grow by 19%-20% in the next two to three years. Now, I'll explain to you what are the demand drivers in the domestic markets and export markets. The major demand drivers are power generation in renewables through solar and wind energy, and also we are seeing a substantial new investment coming in coal-based thermal power projects and related infrastructure in transmission and power distribution by transmission and distribution companies of central government and state government, user industry of energy like data centers, new manufacturing projects, and infrastructure projects like railways and metro rails and highways. Apart from that, electric vehicle infrastructure and kit for electrical vehicles is also in our product range, which we are catering to EV infrastructure.
We assure that we will continue to grow with the projected percentages that we have stated, and we'll try to improve upon it during the current financial year and subsequently. This will be our endeavor to keep the growth momentum in the company on a continuous basis. Thank you very much, and I would like to invite you to have any further questions you may have. We'll be glad to answer. Thank you.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets only while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.
I repeat, you may press star and one to ask a question. We have our first question from the line of Praveen Sahay from Prabhudas Lilladher Capital. Please go ahead.
Yeah, hi sir. Congratulations for a good set of numbers. My first question is related to the volume growth, and this is clarification. In the Q4, you had said 21% of the volume growth in the wire and cable segment you had reported. That is including domestic and international. Is it correct?
Yes. Yes.
If you can give a bifurcation.
It is based on the production. It is based on the production.
Okay. And how has the domestic market done in terms of volume?
Praveen, we are using the volume growth only on the basis of production. Based on production.
Okay. Production.
You see, we have the limited capacity. We have the capacity constraint. Whatever we are producing, either we are selling through export or selling through the dealer-distributor market or directly selling to the institution. It does not matter to us. In some quarter, we may sell more in domestic. In some quarter, we may sell to export market more. In some quarter, we may sell more to the dealer-distributor. Ultimately, it does not matter in which market the product is going, but the overall growth rate needs to maintain according to the production capacity we are having.
Right, sir. If you can give some more color on your export number because that has grown quite very strongly. Is that a one-off element attached to that? Is that also, if you can add, is that the benefit of a US tariff you received certain things?
No, no, no.
First of all,
this is not a—yeah, you please.
First of all, as I said, sometimes we get the order from the export market, so we need to book the capacity accordingly. From where we are getting the order first, we need to book the capacity accordingly.
These are not one-off exports. These are consistent exports from our consistent customers. This export in Q4 is not consisting of any single large order we have received. It is consisting of several orders of different directories. These are our consistent customers.
Right, sir. Got it. Second question, sir, related to the EHV, that's the INR 400-odd crore of revenue you had done, and the way forward, I believe the guidance is of INR 600-odd crore. How are you going to see this EHV business the way forward? Because your capacity at Conant is also coming up.
In the next two to three years, if you can give some guidance related to the EHV, it would be helpful.
The EHV capacity in Conant will be operational by FY 2026-2027 because that EHV segment of the project, which is phase two, will be completed by March 2026. That means that capacity will be there for production only in 2026-2027. Our focus will be mainly on domestic market as well as export both. We have a substantial export market of EHV cables, which we have developed, but there are some technical constraints due to which we cannot sell too much in the export market because of the high freight and heavy loads, which have to be carried from North India to the ports.
There are some technical issues and some length, which we need to be produced in the very long length, which we will be able to produce in Conant. There are some technical issues due to which we are not able to grow the export market substantially from our existing Chinchpada factory. The moment Conant comes, the export will see a substantial jump in the extra-high voltage segment also, as well as the other segments where we are lacking the capacity.
Okay. Okay. Just related to that, even the export has gone up more, and this quarter I have seen that the LME prices were also up, but that's not reflecting in the margin front, actually. If I look at your margin, the gross margin has been YoY is quite a 1% down. What factor leads to that?
LME prices will not factor in the margins. LME prices, if they are high, they can increase the sale value, but margins are quickly adjusted with respect to the raw material cost. You can say something about it.
Praveen, what is your exact query?
Sir, what I believe is if there is an improvement uptrend in the LME prices, there could be some gain also you absorb. The second is the export business, if that is increasing, that is a high-margin business. Why not our gross margin reflected these two factors in this quarter?
First of all, in the past also, we have guided that all the raw materials pass through, whether it's going up or it's going down. Neither we will be gaining anything, neither we will be losing anything.
Second is in the case of export, as I said, in the case of only half % margin is improved in the case of export or dealer-distributor margin. Otherwise, more or less, prices are similar. That is why we are not only focused for any particular each segment, as we are operating in an environment where we are catering to all types of customers. From where we are getting the orders, we are utilizing the capacity accordingly. That is why we are saying that we will be growing in the future also 17%-18%, but it does not matter to us. We will grow in export, we will grow in dealer-distributor, or we will grow in institutional segment. Ultimately, objective is to utilize the capacity. The little bit margin got affected mainly because of the lower sale of EHV division.
Since now, the current year, the EHV sale will be to the fullest capacity, so this half % margin will get improved. The operating margin will get improved. Right. Thank you, sir. If you can give the CAPEX number for 2026-2027, it would be helpful. Around INR 1,300 crore because whatever unutilized QIP money is there, that will be invested to complete this Conant project in the current financial year. Apart from this, another INR 100 crore is for maintenance CAPEX and for the new line. Okay.
Thank you, sir, and all the best.
Okay, Praveen.
Thank you. We have our next question from the line of Varacha from Ask Investment Managers. Please go ahead.
Yeah. Namaste, Anil Ji and Rajeev Ji. Namaste.
Namaste.
Namaste, Varacha.
Namaste. Anil Ji talked about 17%-18% growth rate with improvement in margins.
Is that a reference to the coming year, financial year 2025-2026, or for the longer term? Because on the longer term, I thought with the increase in capacity, we are aiming for growth upwards of 20%.
No, no. Varacha, in longer term, I have mentioned in my commentary that the growth will be upwards of 20%. This 17%-18% growth I have mentioned only for 2025-2026 because in this year, we will be only settling the new plant one by one month after month. We'll be able to ramp up the production month after month, even after commissioning. This will be a challenging year for us to ramp up the capacity and bring it into convert it into commercial production. However, I have said that we will aim to achieve better.
I'm only saying a little conservative figure because my approach is always to say less and achieve more. We have always achieved better than what we have always said.
Just to clarify, for the moment, I thought 17%, lambe has a key destiny
नहीं बन जाए. तो थोड़ी मुझे घबराहट हो गई.
I thought I just.
Growth will be upwards of 20% from 2026-2027 onwards. In this year also, we will aim to achieve 20%. We will definitely not let down our investors.
Thank you. That clarifies. Just one last thing. Rajeev Ji, the margin improvement journey over the period of time due to a variety of factors that we have discussed many times, that is intake, right?
Yes, sir.
That's only after the commissioning of this plan, as I said, from 2027-2028 onwards, when the economy of scale will be there and the benefit out of that will be there. Okay.
Thank you.
Thank you, Varacha.
Thank you. We have our next question from the line of Dhruv Bhatia, an individual investor. Please go ahead.
Hi. Thank you for the opportunity and congratulations on a great set of numbers. Sir, the question is around working capital because when you see your consolidated cash flow, your cash flow generated from operations last year was about INR 815 crore, and this year it is down to INR 200 crore approximately. And working capital has seen some massive swing. So what exactly happened, if you can explain, and whether that's going to change in.
That will be earlier guidance that till we are having the cash, we will be purchasing through cash.
You must have seen in the balance sheet that the payable item has reduced substantially, even though the sale has increased by 20%, but the payable has reduced. That is mainly because of that, nothing else. In the normal condition, the payable will go up.
Right. The second question I have, sir, is it's a slightly more industry-wide one. You are having some new very aggressive competitors talking about large amounts of CAPEX to enter the sector in the next two, three years. How do you see that playing out? Demand is obviously very strong and will continue to grow. Do you see an impact on margins potentially in this sector once these capacities come on stream?
We are already here since the last 15-20 years. We are delivering the numbers. And whatever we are saying, we are delivering.
Even in the last quarter, so much human drive was there for the industry, but the industry has given the results not only by KEI but by the other players also. The growth is there. The momentum in the industry itself is very strong. If little bit EBITDA margin, no one can say anything, but no any major impact.
Okay. Thank you.
Thank you. We have our next question from the line of Akshay Gattani from UBS. Please go ahead.
Thank you, sir, for the opportunity. My question is on the export business.
Sorry to interrupt, Mr. Akshay. Can you please be a little louder?
Yeah. Hi. Is it audible now?
Yes, sir. Audible.
My question is on the export side of the business. How is US market shaping up post-tariff announcement? Have you seen any temporary pause in the consignment?
Also, how do you see U.S. geography from a longer-term perspective in terms of product approval and product acceptance there? Thank you.
Actually, as of now, whatever order we were having, we had delivered. It will be known only after two, three months when everything gets settled from the US market. As I said earlier, for us, it does not matter we are selling to US market, we are selling to Middle East, or we are selling to Asian market. For the next year onward, because of the capacity, we will be growing close to 20%.
Sorry, Rajeev Ji. I think we lost you for 30 seconds. Last 30 seconds.
I said that for the current year, our growth rate, Anil Ji said, 18%, and from next year onward, we will be growing close to 20%.
This is on the capacity because the market is so huge. The number of customers from overseas as well as from domestic are a very large number of lists we are having. So we are not depending only on one country.
Got it. Thank you, sir.
Thank you. We have our next question from the line of Vidit Trivedi from Asian Market Securities. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity and congratulations on the great set of numbers. Could you please tell me what's your mix, I mean, how much do you export to the U.S. of the overall exports? And second, coming to the EHV cable side, it has dropped sharply. What was the main reason of the contraction, and when do you see the recovery happening?
The recovery has already happened. We have already order book is around INR 603 crore.
In the current year, we will be utilizing the full 100% capacity. Some of the orders could not be executed because of the ROW issue.
Okay. What's the U.S. share?
U.S., this year, we have exported close to around INR 250 crore. INR 163 crore exactly. INR 163 crore. Sorry.
Thanks a lot, sir. That's helpful. All the best.
It's a very small portion of our export going to U.S.
Yes, sir. Thank you.
Thank you. We have our next question from the line of Naushad Chaudhury from Aditya Birla Mutual Funds. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Just one clarification, sir. During FY 2025, the key raw materials, copper and aluminum, on a low base, it went up 13%, 15% in INR terms. And on that, on a blended basis, if I see our revenue was up 20%.
With reverse and very rough calculation, roughly 10%-11% would have come from the value growth. Now, as the copper and aluminum both are softening, at least for now, based on March closing, considering this fact, is there any risk to our guidance of 17%-18% for FY 2026 given the direction of the market?
First of all, in the last four-five years, in one year, copper and aluminum goes up, in one year, copper and aluminum goes down. In all the last four-five years, or in the last 15 years, we are continuously growing. In the last 15 years, so many times copper or aluminum has gone up, and so many times copper and aluminum has gone down. It does not impact really because we are searching for a newer market for ourselves. That's how we are growing year after year.
It is applicable to the whole industry, not only KEI. The other players are also growing. The impact of the increase or decrease does not matter for the growth.
Okay. Okay, sir. Second, do we quantify the inventory gains, if any?
As I said, we are working on a pass-on mode. Neither we are gaining, neither we are losing anything.
Okay, sir. All the best. Thank you.
Thank you. We have our next question from the line of Shrinidhi Karleker from HSBC. Please go ahead.
Yes. Hi. Thank you for the opportunity and congratulations on great set of numbers. Just a couple of questions on export business. The last year we have had a INR 1,260 crore kind of export business, and you said INR 160 crore was US. Is that right?
Yes, sir.
Okay.
My second question on that is, what are our principal competitors in the non-US market? Are these local companies, or are these global companies, or do we face more of a Chinese competitor? This, I'm talking about non-US market.
Mostly in non-US or US market, we have only global competition. In non-US market, indeed, I think wherever we are exporting, I have not seen any Chinese competition to us because we manufacture specialized tailor-made products for projects. Wherever tailor-made products are manufactured, as per the international specification and with the specified approvals, we do not face competition from Chinese companies.
Thank you. The second, I'm a bit confused on your margin guidance for the next two years. Would it be possible to quantify how much of EBITDA margin increment one should build for the next two years?
Yes. We are saying that because of the economy of scale from 2027-2028 onwards, when our Conant project is established, little bit EBITDA margin will improve. That's what we said.
Not in 2026-2027, is it?
No. No.
Okay. When you refer to EBITDA margin, you refer to EBITDA margin including other income, which I think last year we did.
Whenever we say EBITDA margin, that is including everything.
Including other income.
The last question I have is, I want to understand the HT cable business that we have of about INR 2,000 crore. What are the largest end markets for that, for the HT cable?
HT cable main customers are power distribution companies. Including the solar and wind projects because they need HT cable for evacuating the power generated through solar farms and take the power to the grid.
So the major consumers are solar power projects and power distribution companies.
Understood, sir. Thank you for answering my question and all the very best.
Thank you. We have our next question from the line of Kunal Sheth from BNK Security. Please go ahead.
Yeah. Thank you, sir. My question has been partly answered. This was about margin only. But sir, just one clarification. Initially, we were talking about small margin improvement every year about 20-30 basis points. So has anything changed there, sir? Because now we are talking about margin improvement in 2027 and not in 2026.
We are improving the margin. Last year also, we have guided that once we settle down this new product in the new facility, only economy of scale we will be improving. Otherwise, whatever EBITDA margin 11% around we are operating, we will be operating at that level.
Sure. So sure. Thank you.
Thank you. A reminder to all participants, if you wish to ask a question, you may press star and one on your phone. I repeat, if anyone wishes to ask a question, you may press star and one. We have our next question from the line of Avneesh Vernand from Vekarya Investment Management. Please go ahead.
Yeah. Hi. Good afternoon. Thanks for taking my question. I have two. One, regarding the US market in this industry, wiring cable industry, Mexico seems to be a key geography which is exporting to the U.S. My question was that in the past, there have been claims that Mexico has been acting as a transshipment hub for the Chinese materials. So I just wanted your opinion on that.
Is Mexico a key transshipment hub for China, or do you think Chinese material gets through into U.S. through countries more like Vietnam and Cambodia, not really Mexico?
Chinese material coming through transshipment, this is not our outlook, this is not for us to inquire because this is for the U.S. government to see that from where the Chinese material is coming. We are creating our own market and our own niche markets and niche customers and catering to them and at our terms. I mean, I can't answer this question about this transshipment of Chinese products.
Sir, I would like to add here because whether U.S. government is taking the material or not taking the material, it will not impact the industry of India because whatever rate we are growing, we will be growing.
Ultimately, last year, whatever exports we have done, there might be some Chinese or other Mexican companies must be in competition.
Yeah. No, I was asking from the angle that if tomorrow there is an increase, let's say incrementally higher tariff on Chinese goods and any goods that are sourced from China, then is there a possibility of any market share shift from Mexico to India?
Sir, as it is, there is so much of tariff on China at the moment that nobody can import by paying those tariffs.
No, no. I was asking about Mexico because if I mean, that's why I was asking whether Mexico acts as a front for China or not.
No, we are not really aware about it.
Okay. That's fine.
My second thought was, now I understand there is uncertainty on the tariff front, but let's assume after the 90-day pause, the tariff settles at whatever that amount would be, let's say 10%. Who, according to you, will bear the cost? Will it be the OEM, or will it be the manufacturer, or the distributor? Who bears this 10% cost? Whatever that number says to be.
It will be borne by the end customer. I mean, our offers are always without duty. So whatever tariffs are imposed in the U.S., they have to be paid by them. So we are not concerned about the tariff at our end.
Okay. Okay. And in your U.S. exports, do you sell through dealers and distributors, or do you sell directly to the OEMs and the customers?
I think 50% is through directly to OEMs and 50% through distributor network.
Sir, your contracts would be FOB, or what kind of contracts would you have, and how are tariffs mentioned in those contracts?
It varies. There are CIF or FOB, but tariffs are always, any extra tariffs are always payable by the customer. That is why our contracts are very clear.
Sir, contract
कैसा भी हो,
ultimately cost plus
ही होता है। आप चाहे कैसे भी कर लो उसको
। All cost is pass-through basis.
Sir, who can bear 10% or 26% tariffs? इतने तो margin भी नहीं होते हैं।.
Yeah. Understood. Thank you so much, Rajeev and Anil. This answers my question. Thank you so much.
Thank you.
Thank you. We have our next question from the line of Tisha Katudiya, an individual investor. Please go ahead.
Hello.
Yes, madam.
I hope I'm audible, sir?
Yes, yes. Please. Please go ahead.
Yeah. You have mentioned in your past commentary how you want to scale up the export, and we have seen the growth. What is the target? What is the target as a percentage of revenue? How much exports are you targeting as a percentage of revenue, sir?
Our target is to utilize the capacity, and growth rate will be 17%-18% in current year. It does not matter to us whether it is coming from export, it is coming from dealer distributor, or it is coming from the domestic institution. Ultimately, we have to utilize the capacity. That is our main objective.
All right. All right. Where do we see that? Do you see any increase in your market share, or do you expect it to be remaining at what the current level is, given the new competitors that are coming?
We are able to utilize the capacity to sell because we cannot sell more than the capacity we are having.
We expect to increase. We will try to increase our market share from FY 2027 when a substantial new capacity comes on board available to us.
All right. All right. Thank you so much, sir.
Thank you. We have our next question from the line of Natasha Jain from Phillip Capital. Please go ahead.
Thank you for the opportunity, sir. My first question is, how does the pricing work? Is it per kg basis or percentage of raw material price? It's cost plus rating in terms of percentage. Understood. My second question is more industry-based.
Now that most of the, I mean, the major players of wires and cables, the results have been out, we have seen that there has been strong top-line growth, which is warranted because fourth quarter was a seasonal quarter, but then margin expansion has not happened. Is it fair to deduce that most of the benefits that the industry is going to get is out of scale, and there may not be pricing advantage?
We are always saying that whatever EBITDA margin we are having, we will be working in this range only.
Got it. Understood, sir. Thank you so much.
Thank you. We have our next question from the line of Nikhil Purohit from Fident Asset Management. Please go ahead.
Hi. Thanks for taking my question. My first question is, what is the margin differentiator in the domestic versus export markets for wires and cables?
Not more than half percent.
Got it. Okay. Additionally, do we stick to our earlier guidance of exports to the U.S. in FY 2026 being around $5 billion? I think this year it was $2 billion.
As I said repeatedly, it does not matter if we are selling to export or we are not selling to export. What matters to us is only how we are utilizing the capacity. We are exporting to more than 60 countries as of now. We are working with close to 2,100 dealer distributors. We are working with more than 2,000 institutional customers in the country. We are growing in each segment, whether in exports or in dealer distributor or in domestic institutions. How much to have one particular customer or how much to have one particular country, it will not be physically easy to answer well in advance.
I understand. Okay.
Lastly, just one last question. What was the EPC execution this quarter?
EPC execution in the last quarter, fourth quarter?
Yeah. Quarter four, if I remember.
Just one second. Fourth quarter EPC sale was INR 1,150,000,000, as against INR 2,200,000,000 last year, fourth quarter.
Okay. Got it. Thank you.
Thank you. We have our next question from the line of Priyank Chheda from Vallum Capital. Please go ahead.
Sir, I'm sorry. I would not want to miss out the volume numbers for this quarter and for the full year. If you can help me.
Fourth quarter, the volume number was 21%, and the full year volume growth was 20% for the metal growth.
Perfect. Sir, in your opening comment, you did mention solar, coal, transmission, data centers, and EV. These are the four key sectors contributing to the volume growth.
Would it be possible to—
apart from this, the infrastructure growth as well as manufacturing,
is there any big divergence or any one particular sector contributing to a very high incremental growth versus others? Would it be possible to quantify anything in any way? Yeah.
We think every sector is growing, not a big sector. If I—power is growing. If I have to specify one significant sector, that is basically solar power projects, which is significantly high.
Given the installations of solar, which is likely to drop versus significant installations that have happened in this year, anything that you would think that would be compensated by some other sectors? Any view on that?
Sir, if the power availability is high, then related infrastructure of transmission and the user industry has to grow.
There is always a balance of various factors going side by side because if you are producing too much of power, but there is no user, what is the benefit of generating that much of power either through solar or thermal? The user sector also grows simultaneously.
Got it. Sir, just last thing to clarify, you did mention that you work on a cost-plus model, and when we see the gross margins slightly drifting down from 25% to 23.5%, it is because the copper prices are higher and the realizations are higher, and hence the percentage margins are lower, right? Is that the way to read?
As you want to read, you can read, but the issue is the operating margin and the EBITDA margin will remain in the range, rangebound 10.5%-11%.
Perfect. Thank you.
Thank you. We have our next question from the line of Rahul Agarwal from Ikigai Asset Management Company. Please go ahead.
Hi sir, very good afternoon. Anil and Rajeev.
Welcome, Rahul.
Sir, just a couple of questions. Firstly, are we seeing higher employee attrition?
I think the industry is going through a lot of CAPEX. Cable and wire is becoming very attractive for skilled jobs, both.
Anil: Yeah, sure. But are you seeing attrition in your company? [कोई attrition नहीं है।] {Foreign Language]
No.
Okay. Okay. Good. The second question was on working capital. I think somebody previously asked. Just wanted to clarify. Obviously, the operating cash flow generation number looks lower because you're paying payables faster. This process actually started pretty long back, right? You've been doing that for a very long time.
My sense was that ultimately, if you pay payables faster, there has to be some savings on interest, wherein you have a lesser non-fund-based credit. Is that correct?
Right.
When you say 70% of sales, you mean 70% of the dealer distribution?
Yeah, 70% of the dealer distribution.
Understood. Understood. That cash discount for those channel finance sales is obviously netted off in the gross margins, right? So gross margins are after that.
Yeah. Yes.
Understood. This 70%, any target you have in mind, sir? Will it be like 90% or anything of that sort?
Hello? Hello. We are increasing the sales, that's how we are adding more and more dealer distributors under the channel financing.
Understood. Understood. Yeah.
The second question, you know, if I make a quick summary of what you're saying, is essentially, you will utilize the capacity fully, that should drive 18% revenue growth.
And the margins while because of ESG and wires, margins should improve, but because of the new capacity-related expenses, the margins are expected to remain stable. Have I understood right, sir?
Yeah. Yeah. That's right. Okay.
Thank you. I thank you. Operator, we can take the next question.
Thank you, sir. We have our next question from the line of Ankit Soni from Sharekhan Merry Assets. Please go ahead.
Sir, good evening. Congratulations on a good set of numbers. Just one question from my side. Once your finance facility is operational, what time would we take to get onto a full optimum utilization of the facility so that we can fetch that logistics benefit which you are right now triggering to? And what would be the margins jump after reaching optimum capacity utilization?
This capacity we have created to utilize within three financial years. Number one, because whenever any company adds the capacity, they are not adding the capacity only for one year. They will be utilizing the capacity for the next three, four years. Second is the half to 1% with the margin will get improved, will get start improving from 2027-2028 onward. Okay. Right. Because of economy of scale only. Not because of selling price or anything else. Only because of economy of scale.
So, follow-up on that would be like will be taking around three years to fully, optimally like 70-80% capacity utilization from that particular finance facility. Am I right?
Yeah. Yes.
Okay. Thank you.
Thank you. We have a follow-up question from the line of Shrinidhi Karleker from HSBC. Please go ahead. Yeah.
Thank you for the opportunity.
Sir, would it be possible to comment on how much of your domestic institutional business of about INR 3,100 crore comes from the power sector?
Normally, power sector on an average is close to 30%-35%. Okay. Directly or indirectly. You see, most of our dealer distributors are also selling to the power sector, no? Means we are selling the cable to them. They are also selling to them, no?
Right. Yeah. Understood. Anjiti, this, the housing wire and winding wire business that we classify, is that all through retail channel or there is some bit of a direct channel in housing wire and winding wire business?
It will be to institutional sale also because, not much but it is small. Like we are selling to L&T for a full package.
We are selling wire also to them,
but it will be a small number, as you said.
Yeah. It will be like last year number was close to INR 178 crore. Okay. Institution for the wire sale.
Understood. Yeah. Thank you for answering my question.
Thank you, sir.
Thank you. We have our next question from the line of Shravan Vijayaraghavan from Sincere Syndication. Please go ahead.
Yes, sir. Congratulations on a good set of numbers. My doubt is that, especially in the HV cable side, do you directly deal with these, let's say, power and T&D companies such as Hitachi, Siemens, or do you go through dealers and distributors?
Sir, normally 50 in the SI, okay, power cable you are asking? Yes, sir. In the HV cable for transmission. EHV cable, 50% we are selling directly to the power transmission company.
Okay, sir.
Fifty percent through the EPC contractor.
Okay. Okay, sir. In the latest project that Hitachi has got, the 1,200 kilometer project and the 92 kilometer project, any idea if you have bagged any of those orders too?
Sir, whenever they will be required, the cable, it will be on that stage only. Okay. Okay, sir. Because the cable comes later.
Okay. This comes later in this stage. Okay.
Yes.
Thank you, sir.
Thank you. Ladies and gentlemen, this was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.
Thank you very much for the participation. We are once again assuring you all that we will be growing 18% kind of growth rate.
It will not matter whether any contingencies are there or not there, any rate increase or decrease, but we will be growing 18% because we are adding the capacity.
Thank you all. Thank you. On behalf of Nuvama Institutional Equities, that concludes this conference. Thank you for joining us. You may now disconnect your line.